World Bank Supports Better Education and Job Creation in Bulgaria

The World Bank’s Board of Executive Directors today approved a US$200 million loan to Bulgaria to support the country’s reforms in the social sectors to modernize the education system, improve the financing of health services and create more and better jobs, while enhancing social protection in the economic crisis. The loan is the third and last of a series of Social Sector Institutional Reform Development Policy Loans (SIR DPL) for the Republic of Bulgaria. The support to Bulgaria through the SIR DPL series is part of the framework of the Country Partnership Strategy (CPS) that went to the Board in June 2006 and has included substantial World Bank technical assistance in education, health and social protection policy.



“Bulgaria aims to speed up its convergence in living standards with its European neighbors over the medium-term, despite the current economic downturn, and increased productivity lies at the heart of this agenda,” said Orsalia Kalantzopoulos, World Bank Director for Central European and Baltic Countries. “The measures adopted by the Government and supported by the SIR DPL series are expected to contribute to laying the ground for enhanced productivity through increased skills of the labor force, a better investment climate, and more efficient health, education, and social assistance systems,” said Ms. Kalantzopoulos.



Specifically, the SIR DPL3 supports much-needed reforms to raise the quality of education through the further roll-out of a system of school-based management, delegated budgets and enhanced external student assessment such as the new Matura. In line with Bulgaria’s new national employment strategy, it also includes reforms to reduce the regulatory burden on companies in order to create more new jobs and a new policy of opening opportunities for second chance education and training for early school leavers to improve their chances on the labor market. Lastly, the program supports measures to raise the efficiency and control of public spending on health and education.



At the same time, the SIR DPL 3 takes account of Bulgaria’s current economic downturn and the considerable uncertainty triggered by the turmoil in the global financial markets. According to Florian Fichtl, the World Bank’s country manager in Sofia, “social sector reforms supported through this loan with a medium-term outlook have been complemented by measures to cushion the immediate social impact of the economic crisis.” These include adjustments to unemployment benefits as well as active labor market programs for unemployed workers or those at risk of being laid off.



The objectives of the Government’s overall medium-term reform strategy promoted by the SIR DPL-supported program are to be achieved through the implementation of policies and actions in a number of areas.



The program creates opportunities and incentives for individuals to join the labor market and to move to more productive jobs. It will also make it easier for companies to start new businesses and hire workers by improving the institutional and regulatory framework.

In the area of education, the program has introduced changes to the finance and governance system for primary and secondary education to improve the quality of education and enhance the efficiency of resource use. In addition it will help education authorities to better assess the quality of education and use information critically to improve the education system.



The program also promotes improvements in health care by making the system financially sustainable and laying the groundwork for improving its quality. Further, it has prepared a plan for restructuring the health facilities network, while using insurance administrative systems to improve the efficiency of health expenditures, and making purchasing and reimbursement policies for pharmaceuticals more rational.


Finally, SIR DPL 3 promotes systematic monitoring and evaluation of social sector policies.



The loan approved has a maturity of 17 years, including a five-year grace period.