Decentralization of the government in Bulgaria – former decisions, recent reforms, future consequences

Abstract

Bulgaria is one of the first countries from the former socialist block, which adopted a new democratic Constitution as early as 1991. The Constitution affirms the model of modern democratic state and outlines the principle of decentralization, admitting the right of self-government to the municipalities. Development of the legal frame of the local self-government and the enlargement of its functions, including the regulation of the financial independence of the municipalities, was accepted as a good perspective for further development of the local self-government.

Based on the above the paper analyses:
• Political, administrative and financial decentralization in Bulgaria as an integral part of the process of making public institutions more efficient, responsive and accountable to citizens;
• Historical background of the decentralization process - undertaken reforms; adoption of legal texts; Constitutional amendment for providing local authorities with taxation powers; establishment of a joint Working Group on Financial Decentralization; adoption of a Concept and a Program for Financial Decentralization; creation of a system of incentives which target higher local revenues, consolidated financial management potential, and maximum level of local autonomy to determine the type, scope and provision of municipal services; division of municipal budget financed public services into two groups (state delegated and local); development of Strategy for decentralization and a Program for its implementation;
• The impact of national and international (Council of Europe, European Commission) institutions and NGO’s on the decentralization process.

The purpose of the paper is not only to reveal the past reforms, but to stress on the present results and to examine the intergovernmental fiscal relations and local financial management. Unfortunately despite the positive changes, made in the first years after the period of centralized economy and governance, nowadays the local finance system is almost unchanged. Some of the ascertained problems might be summarized in the following:

- Presence of permanent structural deficit in the municipal budgets, caused by the discrepancy between expenditure responsibilities and the income base;
- Complicated, non-transparent and frequently changing transfer system;
- Insufficient financing of delegated responsibilities;
- Reduction of the recourses for municipal investments.

The experience in our country shows that a number of former decisions and initial intentions in the sphere of decentralization end with stabilization of the centralization. In this respect the paper searches arguments, connected with the reasons for the above described situation – is it a result from:
• the unpreparedness of local government institutions and local stakeholders to operate in a reformed environment and the limited capacity to design, implement and monitor decentralization policies;
• or from the wish for realizing a lot of changes for very short period of time;
• or the reason is in the lack of political will.