Economy
GDP (2006): $31.49 billion.
Real GDP growth: 6.1% (2006); 5.5% (2005); 5.7% (2004); 4.3% (2003).
Per capita GDP (PPP, 2006): $10,700.
Inflation rate: 6.5% (2006); 5% (2005); 6% (2004); 5.6% (2003).
Unemployment rate: 9.61% (2006 average); 11.5% (2005); 12.7% (2004 average); 14.25% (2003 average).
Natural resources: Bauxite, copper, lead, zinc, coal, and timber.
Official exchange rate: Lev per $1 U.S.--1.56 (2006); 1.57 (2005 average); 1.58 (2004 average); 1.73 (2003 average).

BULGARIA ECONOMY
Bulgaria's economy contracted dramatically after 1989 with the collapse of the COMECON system and the loss of the Soviet market, to which the Bulgarian economy had been closely tied. The standard of living fell by about 40%. In addition, UN sanctions against Yugoslavia and Iraq took a heavy toll on the Bulgarian economy. The first signs of recovery emerged when GDP grew in 1994 for the first time since 1988, by 1.4% and then by 2.5% in 1995. Inflation, which surged in 1994 to 122%, fell to 32.9% in 1995. During 1996, however, the economy collapsed due to shortsighted economic reforms and an unstable and de-capitalized banking system.

Under the leadership of former Prime Minister Ivan Kostov (UDF), who came to power in 1997, an ambitious set of reforms were launched, including introduction of a currency board regime, bringing growth and stability to the Bulgarian economy. The currency board contained inflationary pressures and the three-digit inflation in 1997 was cut to only 1% in 1998. Following declines in GDP in both 1996 and 1997, the Bulgarian Government has delivered strong, steady GDP growth in real terms in recent years. Prime Minister Simeon Saxe-Coburg's economic team of young, Western-educated financiers continued to implement measures that helped sustain stable economic growth and curb unemployment. Measures introduced by the government were targeted at reducing corporate and individual taxes, curtailing corruption, and attracting foreign investment. The government also restructured the country's foreign debt, revived the local stock market, and moved ahead with long-delayed privatization of some major state monopolies. As a result of this progress, in October 2002 the European Commission declared Bulgaria had a "Functioning Market Economy."

Bulgaria's current government has continued these reforms, and in 2007 the country joined the European Union. According to the World Bank, in 2006 Bulgaria attracted the highest levels of foreign direct investment, as a share of GDP, among Eastern European countries. In early 2007, to attract additional foreign investment, the Bulgarian Government lowered corporate tax rates to 10%, reportedly the lowest rate in Europe. The government has decided to introduce a flat-tax rate of 10% for personal income, effective January 1, 2008, which will further decrease domestic labor costs and help reduce the share of the "gray" economy. In response to local governments' demand for financial independence in 2006, parliament passed fiscal decentralization of municipalities, thus further enhancing local economic stability. Despite Bulgaria's many marked successes, organized crime and corruption remain problems.

DEFENSE
Bulgaria became a member of NATO on March 29, 2004 after depositing its instruments of treaty ratification. Bulgaria's military is currently undergoing an ambitious restructuring program aimed to bring the army up to NATO standards and modernize equipment. In 2007, constitutional amendments annulled military conscription, thus allowing the Bulgarian army's transformation to an all-volunteer force.

Bulgaria has been an active participant in military operations outside its borders. It currently has company-sized units working with coalition forces in Afghanistan and Iraq and has maintained small contingents of troops deployed with international forces in Bosnia and Herzegovina and Kosovo. It deployed a frigate to Lebanon with UNIFIL in late 2006,