Annual data2008(a)Historical averages (%)2004-08Population (m)7.5Population growth-0.6GDP (US$ bn; market exchange rate)50.2Real GDP growth6.3GDP (US$ bn; purchasing power parity)93.6Real domestic demand growth9.0GDP per head (US$; market exchange rate)6,660Inflation7.8GDP per head (US$; purchasing power parity)12,420Current-account balance (% of GDP)-16.8Exchange rate Lv:US$ (av)1.33(b)FDI inflows (% of GDP)19.6(a) Economist Intelligence Unit estimates. (b) Actual.

Background: After a violent communist takeover, Bulgaria became a People's Republic in 1947. The communist regime collapsed in November 1989, but the Bulgarian Communist Party—renamed the Bulgarian Socialist Party (BSP)—won the country's first free election. The anti-communist Union of Democratic Forces (UDF) formed a government after the election in October 1991, but this was replaced in December 1992 by a technocratic government backed by the BSP and the mainly ethnic Turkish Movement for Rights and Freedoms (MRF). The election in December 1994 returned the BSP to power, but a severe economic crisis in 1996-97 forced an early election in April 1997, which was won by a UDF-led centre-right coalition. The Simeon II National Movement (SNM, which has since changed its name to the National Movement for Stability and Progress; NMSP) won the election in 2001 and governed with the MRF until the election in June 2005. The BSP won the election in 2005, although it fell far short of winning an absolute parliamentary majority. After lengthy negotiations the BSP, the SNM and the MRF formed a governing coalition in August 2005.

Political structure: Bulgaria has a unicameral legislature. The 240-member National Assembly is constitutionally the highest state authority. Its members are elected by proportional representation. A new constitution was passed in July 1991. The head of state is a directly elected non-executive president, who has the power to delay legislation, but not to block it.

Policy issues: Following the economic crash in 1996-97, an IMF-backed currency board was introduced. The currency board is intended to continue until Bulgaria adopts the euro (which is unlikely before 2014). The currency board limits monetary policy and so fiscal policy will remain crucial for macroeconomic stability. Further reform of the judiciary, and intensified efforts to combat corruption and organised crime, will be needed if Bulgaria is to avoid further imposition of punitive restrictions on EU funding.

Taxation: There is a flat tax system in place, with a single 10% rate applied on personal income since January 2008, and a 10% rate applied on company profits since January 2007. Value-added tax (VAT) is levied at a single rate of 20%, although tourism packages sold abroad have a rate of 7%.

Foreign trade: In 2008 exports of goods (fob) amounted to US$22.7bn and imports of goods (cif) amounted to US$35.6bn. The current-account deficit was US$12.6bn in 2008 (25.2% of GDP), larger than the 2007 deficit of US$8.7bn (22% of GDP).

Major exports 2008% of totalMajor imports 2008% of totalOther metals11.4Crude oil&natural gas17.0Clothing&footwear9.1Machinery&equipment9.7Iron&steel6.1Chemicals, plastics&rubber5.9Chemicals, plastics&rubber5.0Textiles4.9    Leading markets 2008% of totalLeading suppliers 2008% of totalItaly9.8Russia17.6Germany9.1Germany10.9Greece8.7Italy7.8Turkey8.4Ukraine3.3