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Grey economy shrinks in Bulgaria, report shows

01 February 2013, 12:40 CET
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(SOFIA) - Tighter rules for obtaining EU funding has reduced slightly the amount of economic activity in Bulgaria undeclared to the taxman but much remains to be done, a new report said Thursday.

Reduced public spending and the reluctance of banks to lend has made EU money "a primary source of fresh financing" for companies, the study by the Sofia-based think tank Centre for the Study of Democracy (CSD) said.

Stricter controls for this EU cash have encouraged "companies to declare their entire activities and turnout," it said.

However, the grey economy, estimated to account for 15-30 percent of total output, remains "one of the biggest problems hindering the development of Bulgaria's economy," according to Regine Schubert, head of the Sofia branch of the German Friedrich Ebert Foundation, which co-funded the study.

"The reduction is feeble," Schubert said, calling for legislative and administrative reforms to curb the corruption on which the underground economy feeds.

Bulgaria, which joined the European Union in 2007 and is its poorest member, has long been criticised by Brussels for failing to tackle corruption and organised crime.


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