OECD MULTI-LEVEL GOVERNANCE STUDIES DECENTRALISATION AND REGIONALISATION IN... BULGARIA TOWARDS BALANCED REGIONAL DEVELOPMENT.

Foreword
Acknowledgements
Table of contents
Abbreviations and acronyms
Executive summary
	Key findings
	Key recommendations
1 Assessment and recommendations
	Key findings
		Bulgaria has made progress in its governance and socio-economic development, yet significant gaps remain
		Territorial disparities have increased in Bulgaria
		Bulgaria has placed considerable effort into designing decentralisation strategies and fostering more place-based regional policies, but has not yet achieved the expected outcomes
		Municipal governance faces challenges in political, administrative, and fiscal decentralisation
		Regional governance could be stronger at the district and planning region levels
	Key recommendations
		Moving forward towards a place-based and integrated approach for regional policy post-2020
		Revisiting the 2016-25 decentralisation strategy to better link decentralisation, regionalisation and regional development
		Improving municipal decentralisation: more capacities and resources and better municipal governance
		Reforming regional governance to boost capacity and deliver regional development objectives
2 The context: Strong socio-economic progress, yet large territorial disparities
	Bulgaria has made solid progress in terms of socio-economic development and democratic governance
		The socio-economic transition: From a planned economy to an open, market-based, upper-middle-income economy
		The democratic transition: From a monocentric model of governance to a multi-level governance system
			The municipal level and its localities
			The district level
			The planning region level
	Despite improvements, several economic and governance gaps remain
		Bulgaria performs less well than other EU cohesion countries in several socio-economic areas
		Bulgaria has made significant strides in governance system, and certain dimensions could be further reinforced
	Territorial disparities have increased in Bulgaria, despite active regional development policies
		Regional development policies are not yet yielding the expected results
			The lack of regional development policy until the late 1990s
			The prospect of EU accession: A driver for regional development policy
			Regional development policy after the EU accession has mixed results, despite many positive outcomes
		Territorial disparities have increased at the regional, district and municipal levels
			Regional disparities at the NUTS 2 level: The South West region, driven by Sofia (capital) district, stands out above all other planning regions
				Demographic disparities across Bulgarian regions
				Economic disparities across Bulgarian regions
			The “island of prosperity” dilemma at the district level: The gap between Sofia (capital) district and the other districts
			Municipalities differ considerably in area, population size and economic potential
	References
	Notes
3 Bulgaria’s multi-level governance system: A diagnosis
	The difficult path towards decentralisation and place-based regional development policy
		Bulgaria has undertaken a gradual process of decentralisation for 30 years but with mixed results
			1991-2001: Restoration and consolidation of local democracy
			2002-2005: Progress towards fiscal decentralisation
			2006-2015: A more comprehensive reform on paper but with mixed outcomes
			Why advancing decentralisation reforms is difficult in Bulgaria
		Regional policy in Bulgaria is not sufficiently place-based or integrated
			Strategic planning for regional development remains mainly top-down and not integrated
			The current system of EU funds remains insufficiently place-based
	Diagnosing decentralisation at the municipal level: The political, administrative and fiscal dimensions
		Improving local democracy through enhanced political decentralisation within municipalities
			Since the restoration of local democracy, municipalities and their mayors are strong political actors
			The centralised municipal level model requires improvements
			Stakeholder engagement is not sufficiently developed at the municipal level
		Effective administrative decentralisation has been limited so far
			Local expenditure is relatively low and constrained
			Municipal investment is relatively small, fragmented and highly dependent on EU funds
			Multiple constraints on municipal administrative and strategic capacity hinder effective decentralisation
				There is a lack of staff and expertise in municipalities, especially in smaller ones
				Municipalities have a limited strategic capacity
				Municipalities have difficulty delivering high-quality local services
				Deficiencies, irregularities and low transparency in municipal budget management and procurement
			Inter-municipal co-operation is underdeveloped in rural or urban areas
				The lack of inter-municipal co-operation in metropolitan areas
		Fiscal decentralisation is the weakest dimension of decentralisation in Bulgaria
			Municipalities are financially dependent on the central government
				Grants and subsidies make up the bulk of local government revenue
				Almost 90% of grants and subsidies are earmarked and/or conditional
			The share of own-revenue in municipal revenue is small and mainly composed of non-tax revenues
				User charges, fees and property income: A relatively significant source of revenues
				Tax revenue is low, with structural deficiencies in the local tax system
			Municipal borrowing is low and constrained by fiscal capacity and debt rules
			The fiscal framework for municipalities is sound
	Diagnosing regional governance for regional development
		Districts lack resources, capacities and authority to carry out their functions and implement regional policy
			On paper, districts are a key component of the state territorial administration
			In practice, districts have insufficient human and financial resources to fulfil their mandates
			Districts cannot be considered as leaders or “engines” of regional development policy
			Districts lack the authority to fulfil their co-ordination role across and within levels of government
		Planning regions are weak
			Planning regions are just territorial units, with low capacity and representativeness
			Planning regions are mainly consultative bodies
	References
	Notes
4 Avenues towards place-based regional policy and governance
	New impetus for renewed multi-level governance for regional development
		Moving towards a place-based and integrated approach for regional development policy post-2020
			Bulgaria has defined new regional development priorities and regulations
			The draft 2021-27 Partnership Agreement and the new Programme for the “Development of the Regions” (PDR) promote a territorial approach
			Regional development policy can benefit from decentralisation
		Updating the 2016-25 decentralisation strategy
			On the method: Preparing an implementation strategy based on dialogue, monitoring and experimentation
				Developing an informed dialogue on decentralisation and regionalisation at the national, regional and local levels
				Establishing a multi-level governance “forum” for decentralisation and regionalisation
				Developing effective tools for monitoring and assessing the implementation of the reform
				Conducting pilot programmes and experiments
			Revising the decentralisation strategy
		The proposed process for renewing the multi-level governance framework towards better regional development
			A comprehensive approach linking enhanced municipal and regional governance
				Establishing a multi-level governance platform for dialogue and co-ordination
			Establishing effective multi-level governance co-ordination mechanisms across levels of government
				Developing multi-level governance instruments such as multi-level contracts
	Improving municipal decentralisation: more capacities and resources and better municipal governance
		Enhancing intra-municipal decentralisation and civil society participation for better political decentralisation
			Reinforcing intra-municipal decentralisation
			Reinforcing civil society participation practices, transparency and accountability at the municipal level
		Generating more effective administrative decentralisation
			Improving the assignment of responsibilities: Less delegated functions, more exclusive responsibilities
				A review of government responsibilities and functions at all levels is needed
				Experimenting with asymmetric administrative decentralisation
			Increasing municipalities’ room to manoeuvre regarding investment and improving the multi-level governance of public investment
			Improving municipal administrative and strategic capacities
				Improving human resources development in Bulgarian municipalities
				Enhancing the quality and efficiency of municipal services
				Ensuring the effective use of internal and external resources with integrity
			Better municipal services and investment through inter-municipal co-operation in rural, urban and metropolitan areas
				Commit the country to a voluntary policy for inter-municipal co-operation
				Co-ordination and co-operation in urban and metropolitan areas
		Strengthening fiscal decentralisation and responsibility
			Reforming the grant system to ensure adequacy and flexibility
			Towards local tax reform
			Facilitating access to external financing for public investment: Borrowing and public-private partnerships (PPPs)
				Developing borrowing for public investment
				Cautiously developing the use of subnational PPPs
				Pursuing measures for better fiscal discipline and local financial management
	Reforming regional governance to boost capacity and deliver regional development objectives
		Increased regionalisation reforms in EU and OECD countries have brought to light several models of regional organisation
			Regionalisation reforms represent an important trend in multi-level governance in recent decades
				Why regionalise?
				What kind of regionalisation reforms?
				What kind of regions?
				Regionalisation may not be a uniform or homogeneous process
			Different models of regional organisation have emerged in EU and OECD countries
				Type 1. Statistical/planning regions
				Type 2: Regional associations of municipalities or “co-operative regions”
				Type 3: Hybrid/mixed regions (both deconcentrated and decentralised)
				Type 4: Elected regional governments
			From one model to another: A continuous but non-linear process
		Understanding the ins and outs of the debate on regionalisation in Bulgaria
			The “saga of decentralisation at the regional level”
			Some issues at stake concerning regionalisation
				Which regional level for regional development: Districts or planning regions?
				How many planning regions for Bulgaria?
				Reinforcing planning regions but to do what?
		The current reform of the RDCs in Bulgaria
		Recommendations for reforming districts and planning regions
			Reinforcing the role of the districts as state territorial administration
				Reconfiguring districts responsibilities and scope
				Reinforcing human and financial capacities of the districts
				Which territorial organisation for the districts?
			Strengthening the planning regions as regional development public body: Different scenarios
				Scenarios for transforming Bulgarian planning regions into empowered regions
			Conclusion: Which model of planning regions for Bulgaria?
	References
	Note
Annex A. Regional government responsibilities in EU and OECD unitary countries
Annex B. New polarisation coefficient as an indicator of territorial disparities