Plan "Radev"
The political economy of Rumen Radev's agenda
The parliamentary elections held in Bulgaria on April 19, 2026, proved to be nothing short of a political earthquake. The coalition of former President Rumen Radev, Progressive Bulgaria (PB), obtained a decisive electoral victory, becoming the first party in over 20 years to secure a parliamentary majority. For a political project that had only officially been announced two months prior to the elections, and one month after Radev’s resignation from the presidency, such a meteoric rise to national dominance is almost unprecedented in the European Union. While surprising in its scale, this success was not unexpected in the Bulgarian national context. Radev has consistently polled as Bulgaria’s most popular political figure ever since his election to the presidency in 2016. Furthermore, his frequent engagement with political topics fueled consistent speculation about him forming his own political party, allowing him to mobilise voter enthusiasm in a relatively short time.
Yet, perhaps the main reason for Radev’s victory was frustration. During the winter of 2025, Bulgaria experienced its largest protests since 1997, initially sparked by the proposed 2026 budget before increasingly demanding the incumbent government’s resignation. Unlike most previous anti-government demonstrations, which had been limited to the country's capital of Sofia, or associated with the political or economic demands of specific social groups, the 2025 protest campaign possessed a truly national scale. Although much of the anger was directed toward the Zhelyazkov government, the protests embodied a broader dissatisfaction with Bulgaria’s political status quo. On the one hand, with the failure of the state to pursue genuine anti-corruption reform, the political visibility of figures like Delyan Peevski—widely viewed as an oligarch and deeply associated with allegations of state corruption—created a target for discontent. On the other hand, the protests represented a social activation after five years of political crisis, wherein civil society increasingly felt alienated from the political messaging of Bulgaria’s established elite and withdrew from electoral participation, creating the conditions for the expression of voter preferences in another way.
Radev’s entrance into politics took advantage of these twin factors to build an unstoppable electoral juggernaut during the 2026 legislative elections. During his presidency, Radev had already positioned himself as a consistent critic of Bulgaria’s political establishment, strongly supporting the reformist demands of Bulgarian voters. Simultaneously, as a consistent fixture in Bulgarian politics over the preceding decade, Radev carried the hope of institutional stability. Fundamentally, Radev represented hope for political normalcy.
It is this promise of normalcy that must ultimately foreground any discussion of the current Radev government. Perhaps the core demand of the recent winter protests, and the key message of the Radev campaign, was a collective aspiration for Bulgaria to function as a “normal European state”. In this, despite his occasional flirtation with Eurosceptic rhetoric, Radev represents a desire which has dominated Bulgarian political discourse since the end of Communist rule in 1989: the achievement of convergence with the EU’s most developed member states.
Radev’s government will ultimately be assessed by the Bulgarian voter based on its progress toward this goal. Six months into its four-year term, producing such an evaluation remains premature. However, it may be fruitful to understand the initial approach chosen by Radev and his cabinet, first by looking at the priorities laid out by Progressive Bulgaria’s electoral campaign and subsequently the governance programme published in August of 2026. However, it is first important to establish the various explanations for Bulgaria’s poorer developmental outcomes within the EU context, before analysing the methods that Radev has generally chosen in overcoming them.
Bulgaria’s Development Status: A Review
Utilising the term development in relation to Bulgaria is bound to raise confusion among some readers. This is not entirely surprising: in 2024, the World Bank formally reclassified Bulgaria as a “high-income country”; meanwhile, Bulgaria’s adjusted GDP per capita for 2025 is 73% larger than the world average, putting it in 65th place globally by that measure. From this perspective, it can be argued that the concept of economic development is not relevant for a country that already possesses many of its statistical characteristics.
Still, making such a judgement would be premature, as evidenced by the International Monetary Fund’s (IMF) continued categorization of Bulgaria as an “emerging and developing economy”, as well as the labelling of Bulgaria as one of the EU’s “Less Developed Member States” in the most recent EU report on economic, social and territorial cohesion. Therefore, while the question of Bulgaria’s economic development does not necessarily stand in absolute global terms, it remains relevant relative to other EU member states. In this context, Bulgaria continues to perform comparatively poorly in a number of key developmental indicators, with perhaps the most emblematic statistic being Bulgaria’s GDP per capita in the Purchasing Power Standard (PPS), which is 32% smaller than the EU average. Yet, these indicators do not in themselves prove that Bulgaria faces any specific developmental challenges. For example, it can be argued that Bulgaria’s current hardships are the product of historical circumstances, which have subsequently been remedied through political choices such as the adoption of a market economy or entry into the European Union. The perception of slower development is merely representative of a time lag between implementation and effect, which in the long run will lead to economic convergence with the more developed member states.
Although such a proposition may at first seem naive, it deserves to be investigated, especially considering that it is not entirely baseless. After all, if Bulgaria already appears to be moving toward convergence, then a survey of developmental challenges is, while perhaps not entirely useless, tertiary to an understanding of the factors driving this convergence. In fact, its seeming inevitability would make any attempt at policy analysis in Bulgaria a frustrating endeavour, ending with an approach that either promotes continuity with prior policies or passivity.
At first glance, the figures most commonly associated with economic growth provide a favourable account of Bulgarian convergence. According to data compiled by Eurostat between 2020 and 2025, Bulgaria recorded cumulative real wage growth of 37.4%, the highest in the entire EU. By 2025, it became the bloc’s sixth fastest-growing economy.
However, to assess convergence, it is important to compare countries over a more prolonged period of time. To do so, we can briefly compare Bulgaria’s progress in three indicators—adjusted GDP per capita, PPP (in constant 2021 international $); annual GDP per capita growth, PPP (in constant 2021 international $); and annual change in real labour productivity per hour worked—with Poland and Germany between 2005 and 2025. The choice of Germany and Poland is intentional: Germany, although it is not the ‘richest’ economy in the EU, serves as a proxy for the convergence point; Poland, meanwhile, is a country that started with a similar adjusted GDP per capita to that of Bulgaria in 1990, but subsequently diverged, thus serving as a proxy for whether Bulgaria has managed to narrow emerging divergences in income levels in the subsequent period.
The first observation that is evident from a historical comparison of adjusted GDP per capita is that the divergence between Poland and Bulgaria in the measure has increased. Looking at the ratio of Bulgaria to Poland, this result becomes clearer: in 2005, Bulgaria had an adjusted GDP per capita that was 19% smaller than Poland’s; in 2025, it had become 25%.
A similar result can be found when assessing the rate of convergence of the two countries with Germany: the difference between Poland and Germany in 2005 and 2025 had reduced by almost half (from approximately 30,000 to 16,000); in Bulgaria’s case, the same difference had reduced by only 15% (from around 33,500 to 27,500).
This picture becomes clearer when examining annual growth rates between the three countries. While Bulgaria’s average growth rate over the 20-year period (3.76%) was substantially higher than that of Germany’s (1.05%), it was smaller than that of Poland (3.95%). Conducting a paired, two-tailed t-test between Poland and Bulgaria on the given sample returns a p-value of 0.6, indicating that the observed difference is not in itself statistically significant. However, the broader pattern of GDP growth in the two countries is indicative of how even seemingly minor divergences in annual growth rates can amplify existing differences.
The final indicator compared between the three countries is annual change in real labour productivity per hour worked. Labour productivity is used to assess changes in output relative to the labour used to produce it, and therefore provides a useful analytical complement to GDP per capita. The average labour productivity change between the 3 countries generally replicates the order previously observed in adjusted GDP per capita growth: Germany experienced the lowest level of growth (0.81%), while Poland and Bulgaria had broadly similar outcomes (2.81% and 2.75% respectively). Both Bulgaria and Poland demonstrate moderate positive correlation between annual labour productivity growth and adjusted GDP per capita growth (r=0.49 and r=0.44, respectively). However, considering the small number of observations considered it is difficult to extrapolate any definitive conclusions from these values.
This rather simplistic comparison thus remains inconclusive: although signs of economic convergence are present with regards to Germany, the inter-country comparison of Bulgaria and Poland provides less cogent and optimistic results. While Bulgaria may in fact satisfy the general assumption of convergence, the rate of this convergence appears slower compared to an economically comparable nation. This tentative conclusion is also supported by the broader literature on the topic: Kirova (2020), who analysed a larger sample of Central and Eastern European (CEE) member states on the basis of adjusted GDP per capita, found that ongoing convergence processes in Bulgaria were slower compared to other states. Meanwhile, Ralina and Zlatinov (2024) had more pessimistic findings over a more prolonged period starting from 1970, estimating that Bulgaria’s labour productivity has continuously fallen behind its other CEE peers.
Thus far, the discussion has centered on the economic indicators associated with convergence. However, it is important to examine progress with regard to non-economic indicators for a more holistic understanding of Bulgaria’s current development status. According to scores collected by the OECD’s Programme for International Student Assessment (PISA)—a group of tests assessing skills in reading, mathematics and science among 15-year-old students—Bulgaria has faced a decline in all three categories since 2015 and is currently positioned below the OECD average. Additionally, Bulgaria has the lowest life expectancy in the EU, being surpassed by a number of CEE countries including Romania and Hungary in the 2000s. These results broadly reflect outcomes in education and healthcare, respectively, and are indicative of continued developmental shortfalls.
Crucially, the distribution of economic gains is an important element of any discourse on development that has been omitted from the broader discussion. If an economy grows rapidly, however, the profits from it remain spatially or interpersonally concentrated; development would arguably not have been achieved. In this light, Bulgaria’s relatively high Gini index score (37.2 in 2023 according to Eurostat) blunts some of the optimism provided by the apparent convergence in economic parameters. A direct analysis of regional disparities within Bulgaria is perhaps even more sobering: Peshev (2022) found evidence of increasing divergence between Bulgaria’s regions in relation to economic growth, and Hermansen (2021) similarly found significant inter-regional variance in terms of unemployment, demography and income.
In all, the discussed indicators paint a complicated picture. Certainly, signs of convergence are present and are promising. However, Bulgaria’s development trajectory is far from complete, as evidenced by different growth patterns with other CEE member states, as well as increasing inter-regional divergences. Understanding the obstacles that have contributed to these outcomes thus becomes imperative for an analysis of Radev’s economic program.
Surveying Bulgaria’s Development Challenges
The proximate factors which inhibit Bulgaria’s economic development are generally agreed upon among both academics and policymakers. Chief among them is the current structure of the Bulgarian labour market, which is highlighted as a major concern in both recent OECD and European Commission reports. The most pressing issues are caused by the demographic challenges associated with a rapidly ageing population. They are further exacerbated by a low accumulation of skills caused by relatively poor educational outcomes, as well as the aforementioned prevalence of inequality in access to employment. In combination, this leads to a tight labour market, which leads to inefficiencies generated from skill mismatches and labour shortages. Furthermore, a large proportion of the labour force continues to work in the informal sector, with a 2019 estimate that 24% of Bulgaria’s Gross Value Added (GVA) was a result of undeclared work. The prevalence of informality is itself a product of diverse factors, including the historic non-inclusion of Bulgarian ethnic minorities, in particular the Roma, within the labour force due to persistent barriers to participation.
Besides being allocatively inefficient, the labor market’s high degree of informality contributes to another commonly identified developmental challenge: administrative state capacity. It specifically refers to the ability of the state to exercise its administrative functions and effectively implement its policies. A number of studies, such as Geloso and Salter (2020), have found a strong associative relationship between development and state capacity, although the nature of this relationship remains uncertain. Having this in mind, Bulgaria’s lower state capacity relative to other EU member states, as indicated by its scoring 26th in the European Quality of Government Index (EQGI) in 2025, is therefore another likely challenge to Bulgaria’s development. While the EQGI does not explicitly measure state capacity, the metrics it assesses are deeply associated with it. The two primary drivers of Bulgaria’s low EQGI score were corruption and public sector inefficiencies, both of which decrease perceptions of government effectiveness. Both of these have further been linked with reducing Bulgaria’s state capacity.
A specific indicator of government effectiveness in the development discourse is its ability to enable Social Overhead Capital (SOC) accumulation, which includes infrastructure in particular. Public investment in transportation, for example, is often considered an important pre-condition for sustained economic growth. Although consecutive governments have made commitments toward infrastructure improvement, a 2025 IMF report highlighted persistent gaps in infrastructure quality with the EU average. Importantly, both recent IMF and OECD studies on Bulgarian infrastructure noted that these differences were not only a product of historical disparities, but due to systemic inefficiencies in the allocation of investments driven by a lack of coordination and proper planning. Therefore, the inherited gaps in infrastructure are another developmental obstacle faced by Radev’s government.
The previously discussed issues with state capacity and infrastructure are further aggravated by the current size and structure of Bulgarian capital markets. In theory, even with inefficient state investments, private financing can inject an alternate source of liquidity and still drive development. However, the small and relatively under-developed nature of Bulgarian capital markets, even compared to its regional peers, reduces the feasibility of this alternative and creates another developmental barrier. While bank financing has to an extent compensated for capital market shortfalls, the leverage created through reliance on bank loans arguably generates its own set of developmental challenges, for example by constraining firms from engaging in long-term investments due to the potential strain on short-term liquidity.
The factors listed so far are not an exhaustive list of the developmental challenges Bulgaria presently faces. However, taken together, they demonstrate some of the key issues the Radev government must look to address during its term. More importantly, this brief survey leads to the more complicated question of what structural factors may be responsible for the persistence of the discussed obstacles.
Markets, Dependence and Institutions
The political economy and development economics literature remains divided on the structural causes of Bulgaria’s relative under-development. A number of different accounts have been offered since the end of Communist rule in 1989 to our present moment which, although not necessarily rivalrous, prioritise different aspects within their respective analyses. While understanding these predominantly academic perspectives may seem superfluous, it is integral to a serious analysis of government policy. Ultimately, the set of policies implemented by a government is not random, but rather it is reflective of prioritisation implicitly or explicitly guided by an overarching assumption of the underlying problem. Accordingly, taking a moment to examine the origins of these assumptions is perhaps even more critical than the survey of specific challenges discussed in the prior section.
During the immediate post-communist period, discussions generally centered on the rapid decline in Bulgaria’s economic indicators and living standards. Some development economists went so far as to describe the 1990s as a time of ‘de-development’, a term used to reflect the structural implications of ongoing economic losses. While such a description may seem extreme, it does convey the gravity of ongoing processes such as rapid de-industrialisation, reflected in a gross industrial output decline of 28% in 1991, according to the IMF. Undoubtedly, whether the exact verbiage is accepted or not, Bulgaria suffered developmental losses and its relative position with regard to the developed world had changed.
However, these losses did not seriously challenge the market-based explanation for Bulgaria’s relative under-development. In fact, they arguably acted as the best evidence for it. In brief, a number of economists viewed the economies of the socialist bloc as heavily distorted by years of central planning and limited trade. Therefore, the seeming developmental gains generated by Eastern European regimes were unsustainable, and even potentially artificial. The implementation of market principles in these states merely exposed existing disequilibria and gave the countries the ability to ‘reset’ their development, this time on better foundations. In the long run, after liberalisation processes had been finalised, more efficient resource allocation would lead to total factor productivity gains and broader development.
The primary structural impediment to Bulgaria’s development was therefore the non-implementation of free market policies. This obstacle was viewed by some authors as being predominantly driven by the persistent power of post-Communist elites, as well as the fragmented nature of the Bulgarian anti-Communist opposition. Others such as Hellman (1998) argued that partially implemented reforms created social groups which benefited from them and therefore opposed their completion, thus maintaining or even creating new disequilibria. Overall, however, the full implementation of economic reforms was assumed to produce developmental benefits.
To a degree, Bulgaria’s growth in the early 2000s vindicated this approach. In particular, it was argued that the liberalisation policies of the Kostov government between 1997 and 2001, while perhaps not fruitful during his own term, had created the conditions for development. Whatever challenges persisted were likely a by-product of unfinished reforms, thus making further liberalisation imperative. Yet, a number of political economists conversely argued that tendencies within the growth of CEE countries, including Bulgaria, potentially generated new structural constraints for their development which would not be remedied through further market liberalisation.
The specific mechanism that was highlighted in these analyses is Foreign Direct Investment (FDI), which had served as a key component in Bulgaria’s post-2000s growth. Nölke and Vliegenthart (2009) centered FDI in their attempt to extend the Varieties of Capitalism (VoC) model developed by political economists Peter Hall and David Soskice to the newly liberalised CEE states. Their classification of these economies as Dependent Market Economies (DMEs) was based precisely on their reliance on FDI for capital flows, Trans-National Corporations (TNCs) for economic activity, and cost-competitive exports for growth. While Nölke and Vliegenthart identify it as a potentially functional model for countries’ development, they identified several structural constraints stemming from it, most importantly cost competition from other countries and the exclusive distribution of economic gains to a limited number of spatially-concentrated sectors. Although their initial study did not include Bulgaria, the high contribution of FDI to Bulgaria’s growth makes an extension of the DME framework, and subsequently its hypothesised vulnerabilities, reasonable.
The Growth Models (GM) literature offers a slightly more pessimistic account of FDI-based growth, although its approach focuses on the composition of growth rather than market typology. In Ban and Adâscâlitei (2022), they associate the need for expanded exports with wage repression to maintain export competitiveness. In turn, this constrains domestic consumption and contributes to the aforementioned reliance on bank financing. They further commented that the rise in FDI created vulnerabilities, as demand shocks or other financial crises from the investor states could carry over into the domestic economy. To a degree, such connections are an inevitable consequence of European integration, and the authors are similarly critical of attempts at consumption-led growth among certain CEE countries in the 2000s which involved heavy debt burdens. However, the scale of the identified vulnerabilities is a matter in which developing countries have policy choices.
The perspective offered by both the VoC and GM literature is complemented by Bulgaria’s domestic political economy, which has focused on the integration of Bulgaria within the global market structure. Ganev (2020), despite his generally new institutionalist approach, specifically referenced dependence on foreign capital as a constraint on Bulgaria’s historical development. Zhelev and Kussainov (2024), meanwhile, focused more on the spatial distribution of FDI, arguing that it has augmented regional inequality and disproportionately supported low-end manufacturing. To be clear, the scholars listed do not reject the role of FDI within the development of CEE countries. However, they do highlight the potential negative side-effects that reliance on FDI creates and the constraints they set on development.
A somewhat different explanation for Bulgaria’s under-development is offered by institutionalism. Popularised in the public consciousness by Daron Acemoglu’s and James A. Robinson’s book, Why Nations Fail, its modern iteration is deeply influenced by the New Institutionalist Economic framework established by Douglass North in his book Institutions, Institutional Change and Economic Performance published in 1990. It broadly holds that institutions, the set of rules—both formal and informal—that regulate economic, social and political relations, are an important element in constraining or supporting a country’s development.
A number of scholars have applied the institutionalist approach to analyse formerly socialist CEE states, including Bulgaria. Beck and Laeven (2006), for example, looked at variation in post-Communist institution building within the former Eastern Bloc, linking these differences with divergences in developmental outcomes. Murrell (1996) similarly argues that free markets which are not accompanied by a sufficiently complementary institutional architecture are unlikely to generate development. Indeed, this is the overarching argument made in Ganev (2020), which presents Bulgaria’s developmental challenges as, in part, the product of imported economic models’ incompatibilities with entrenched institutional settings.
These different approaches are evidently not mutually exclusive, nor are they constitutive of all the explanations offered for Bulgaria’s under-development. However, they can be used to broadly frame the ongoing policy discussion in Bulgaria: at the risk of over-simplifying, those in alignment with the market approach support greater liberalisation, those in agreement with the institutionalist approach typically emphasise measures to improve government efficiency and, finally, those averse to dependence argue for policies building domestic consumption and capital markets. Elements of all three approaches are often present within the policies of Bulgaria’s post-communist governments, although typically only one offers the predominant framework.
The Radev Agenda
To analyse the policy approach and objectives of the Radev government, two documents will be used: the manifesto of Progressive Bulgaria for the 2026 parliamentary election and the governance program published by the Radev government in August. These two documents, although predominantly aspirational, give an indication of the general approach adopted by Radev and his political allies. Their importance is amplified by the absence of a significant number of legislative proposals submitted to the parliament, which is not altogether surprising considering the relative recency of Radev’s government. Additionally, paying excessive attention to the policies already proposed, such as the adopted 2026 budget, may provide a limited indication about the long run goals of Radev’s government. All quotes from the documents analysed were originally in Bulgarian and were translated by the author.
Broadly speaking, Radev’s approach to overcoming Bulgaria’s under-development is primarily institutional. This emphasis is clearly demonstrated by the first line of PB’s manifesto: “In Bulgarian society there are destructive processes, which erode institutions, ethical foundations and even the spiritual unity of our people”. The challenges borne from institutional shortfalls, in particular corruption, are described as having “re-written the principles of the free market”, thus implying that further liberalisation without institutional reform is likely to replicate existing issues. Notably, in both the governance program and manifesto, the “dismantling of the oligarchic model” constitutes the first section, delineating its importance.
Based on the evidence within both documents, Radev’s institutionally framed explanation is somewhat narrower than scholarly interpretations. The specific mechanism which is diagnosed as leading to Bulgaria’s under-development is the corruption stemming from an “oligarchic model”. The described oligarchic model can be interpreted as a form of political settlement, wherein an elite group captures economic rents from institutional control by appropriating public financing, and maintains its control through clientelism. This creates a self-perpetuating system which lowers the effectiveness of public investments and, more importantly, distorts the market by encouraging rent seeking behaviour. Overcoming the described model can be considered part of an approach that seeks to enable market-based economic growth, with this conclusion being broadly supported by the other policy priorities undertaken.
The specific steps which are promised to dismantle this model are often focused on administrative changes rather than larger institutional reforms. Radev’s flagship policy, for example, has been the implementation of an AI-based system called SIGMA to assess and provide transparency about public procurements. Another key set of proposals is focused on increasing regulation surrounding the dispersal of public funds and monitoring firms related to public investment. These proposals are meant to dismantle the model by restricting access to public finance, and thus are assumed to gradually weaken the influence of oligarchic elites. More comprehensive institutional reform, in particular of the judicial system, often lacks the detail associated with the administrative measures previously discussed.
Returning to the broader economic and developmental policies proposed by Radev, they in many ways represent a continuation of the priorities of previous governments. Specifically, PB’s manifesto mentions a focus on promoting export growth, albeit in “high value-added products”, as well as the maintenance of a “stable fiscal and macro-economic environment” with a commitment to maintaining low taxes and debt-to-GDP ratio. All of these commitments seem in line with а market-based approach to development which emphasises comparative advantages through specialisation, as well as the role of the state as a facilitator of market activities through prudent fiscal policy.
Still, it would be an oversimplification to claim that Radev’s policy approach is entirely market-oriented. A number of proposals seem indicative of state-led industrial policy, such as efforts to upgrade industrial capacity. However, these policies are primarily implemented within the context of attracting FDI and directing it toward higher value industries. Further promises are made about increases in state investment and measures to develop domestic financing through capital markets; however, these remain less concrete in August’s government programme.
A Break with the Past or Much of the Same?
It is too early to assess the success or failure of Radev’s policies in stimulating development, as many of them are yet to be implemented. However, by placing Radev’s approach within a comparative historical perspective and assessing it against Bulgaria’s current macro-economic conditions, general conclusions may be drawn about its novelty and feasibility.
As previously discussed, reformers in the 1990s were primarily concerned with the establishment of market mechanisms. The 1997 Kostov government, which represented the most durable government formed by the anti-communist Union of Democratic Forces, is emblematic of this tendency. Although it worked to implement institutional reforms, such as improved fiscal policy transparency, this was widely in the service of market reforms and creating a stable environment for markets to function.
To some degree, this strategy was maintained by the Sakskoburggotski government, which was in power between 2001 and 2005. Privatisation continued throughout the government’s tenure, as did the expansion of market principles to new sectors. Institutional reforms, to the extent they did occur, were a secondary element within Sakskoburggotski’s developmental agenda. In the long term, they were motivated by the desire to attain membership within the European Union, though the European Commission noted in 2003 that several administrative reforms remained unimplemented.
Arguably, the pinnacle of market-oriented developmental strategies came during the premiership of Sergei Stanishev, at the time the leader of the Bulgarian Socialist Party. During his tenure between 2005 and 2009, Bulgaria actively pursued actions such as adopting the 10% flat tax to attract FDI. Through this, Stanishev did not follow a purely market-oriented approach, but attempted to build institutional complementarities which would sustain future FDI-driven growth. Despite this strategy being interrupted by the Great Recession in 2008 and the subsequent Eurozone crisis, it underpinned the later approach of Bulgaria’s longest-serving Prime Minister, Boyko Borissov. Borissov was furthermore an initial proponent of institutional reforms to reduce state corruption, although the realisation of these reforms has remained contested.
Perhaps the clearest post-Kostov example of an institutionalist approach was the Petkov government elected in December, 2021. Formed as a result of an unstable coalition united by an official anti-corruption position, the cabinet developed ambitious plans for structural institutional changes. It was also perhaps one of the first post-Kostov governments that actively tried to stimulate domestic consumption through social transfers, although this policy may have in part been driven by the concurrent energy crisis.
Looked at through a historical lens, Radev’s promise of institutional reform is not unique in itself. However, the specific emphasis on an institutional approach, over what can be broadly classified as a market-liberalisation approach, does differentiate him. To some degree, this new emphasis may be considered the product of a shift in political discourse in Bulgaria: in the 1990s and early 2000s, the establishment of a free market economy in Bulgaria was far from complete, centering the debate on the nature and speed of market reform implementation; meanwhile, contemporary discussions have shifted toward the persistent problem of corruption and state ineffectiveness. In this sense, Radev’s inversion reflects and effectively capitalizes on a broader socio-political trend.
Analysing the feasibility or likelihood of success for Radev’s approach, meanwhile, necessitates several important considerations. Foremost among them is the capacity of the Bulgarian state to undertake institutional change. In the public conscience, institutions are often associated with the formal bodies that govern political, social and economic relations, such as the government or the judiciary. In reality, however, institutions account for a larger set of rules, often informal, which are generally heavily entrenched in the behaviour of citizens. In this sense, isolated government anti-corruption declarations or the passing of specific legislation to reduce public sector mismanagement are unlikely to seriously signal state commitment to institutional change.
More structural reforms, on the other hand, are likely to be politically costly. As such, a successful policy of institutional transformation would likely require backing from a significant group within the elite. Such a process is characterised by Belgian development economist Stefan Dercon as a “development bargain”, wherein a significant set of the political elite dedicate themselves to the creation of an environment conducive to development. Radev’s status as an institutional actor may benefit the formation of such a bargain, as it may ease contact with individual elites. This has already been speculated for mayors such as Zhivko Todorov of Stara Zagora and Tihomir Yanakiev of Sozopol possibly defecting to Radev’s Progressive Bulgaria. Simultaneously, however, the formation of such an elite bargain is far from certain; in fact, the government may instead be incentivised toward the re-organisation of the current oligarchic political settlement, wherein Radev and his allies co-opt existing systems for their own benefit and implement only cosmetic reforms. The primary means by which this can be assessed is the effectiveness of new procurement measures to limit state corruption.
A similarly important challenge for Radev’s approach comes in the form of financing. The Bulgarian budget for 2026 recorded a projected deficit in excess of 5%, putting it well in breach of EU fiscal rules. Thus, the possibilities for increased state financing without increases in either taxation or borrowing—both of which are likely to be politically unpopular—are limited. Radev’s government has seemingly wagered on the prospects that institutional reform will increase available private funding through attracting FDI and reducing financing leakages, thus increasing available public investments. This outcome highly depends on the credibility of institutional reform, which at present remains difficult to assess. More importantly, it remains dubious to what degree foreign investors prioritise institutional performance in their choices. Ultimately, the importance that institutional factors have had in leading to Bulgaria’s current fiscal predicament remains far from an established fact. If proven right, however, the government’s gamble can simultaneously restore macro-economic stability and stimulate economic development.
Perhaps the most difficult question that remains unanswered is the role of exports in Radev’s growth strategy. Few policymakers, let alone Radev, advocate for an export promotion strategy based on minimising labour costs: it would require a level of wage repression that, given Bulgaria’s tight labour market and weak unions, is likely impossible. The proposed strategy seems instead to focus on directing FDI toward high value-added, export-oriented industries in Bulgaria. It remains to be seen whether these industries will generate serious interest from foreign investors and if their goods will be able to compete on the global stage. Without structural labour market reforms—including a move toward up-skilling and an increase in labour supply through greater inclusion policies—the prospects of both seem somewhat dubious.
Radev’s government offers a unique approach in its attempt to remedy Bulgaria’s under-development. With a serious focus on institutional reform in its program, and possessing a parliamentary majority that few reformers have had, Radev has a historic opportunity to reshape Bulgaria in the upcoming 4 years. However, his government’s efforts will be tested by the results it manages to achieve, which depend both on the credibility of its commitments and the soundness of its assumptions. Ultimately, the legacy of the Radev government will be defined by those same voters who had elected it, and it is their judgement that can either relegate it to insignificance or offer it support through times of prosperity and crisis.
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