Bulgaria will not receive the second €653 million disbursement under the recovery and sustainability plan due to the country’s unfinished reforms, a direct result of the ongoing fourth-year political crisis.
The European Commission said in a statement that the payment has been suspended for six months because Bulgaria has not met its commitments on energy, anti-corruption, and public procurement reforms.
Bulgaria has one month to respond to the Commission’s preliminary assessment to block the money.
Freezing the payment will blow a new hole in Bulgaria’s 2024 budget as the country struggles to limit its budget deficit to 3% to join the eurozone in 2025.
If Sofia’s institutions do not implement the necessary reforms within six months, the Commission could decide to cut Bulgaria’s bailout money.
Bulgaria is entitled to €5.69 billion in EU grants under the Recovery and Sustainability Plan. The country has only received €1.37 billion, the first payment. If the plan had been implemented on time, Bulgaria would have received a total of €4.3 billion by now.
The Bulgarian parliament blocked the energy market liberalisation promised to Brussels, but local politicians’ fears of a sharp rise in household electricity prices meant that full state regulation of the sector was maintained. Bulgaria committed to fully liberalising the market, including for household consumers, by the end of 2023.
Another unfulfilled promise is promoting electricity generation from renewable energy sources (RES), currently the target of attacks by pro-Russian propaganda on Bulgarian social media.
Bulgaria’s third unfulfilled promise is the lack of a roadmap to climate neutrality linked to the closure of coal-fired power plants by 2038. MPs from the pro-Russian radical party Revival and the populist There Is Such a People blocked a resolution to that effect in the last session of the previous parliament, even ripping the cables from the microphones during the debate.
Bulgaria also failed to adopt the necessary anti-corruption reforms, with no new president or members of the new anti-corruption commission elected.
Caretaker Deputy Prime Minister and Finance Minister Lyudmila Petkova warned that this could cost Bulgaria billions in lost EU funds and serious damage to the national budget, including a possible exit from the eurozone.
The country is also the only one in the EU that has not yet submitted its plan to the Commission under the RePowerEU chapter, which finances measures to achieve energy independence from Russia.
