The Social Sectors Institutional Reform — Development Policy Loan II (SIR DPL II), with a World Bank commitment of 102 million Euros, will support Bulgaria’s reform agenda in the areas of health, education, and social protection. The project is supporting policies to (1) increase employment; (2) lay the foundations for long-term productivity growth by providing incentives for job creation and improving quality of education; and (3) promote fiscal sustainability through efficiency gains in the social sectors. These actions are expected to contribute to an increased speed of convergence with EU policies and standards, and better health, education, and social assistance services.
"In order to accelerate convergence with its European neighbors," said Orsalia Kalantzopoulos, World Bank Director for Central European and Baltic Countries "it is especially important for Bulgaria to invest in its human capital. International experience shows that one of the pillars to achieve convergence is a well functioning labor market and more efficient social services that can reach the entire population."
Kalantzopoulos added, "Maintaining the momentum of reforms has become more urgent at this time of turbulence in the global financial markets, and the support of the Bank to the reform agenda in education, health, and social sectors has gained additional significance."
World Bank assistance is focused, in particular, on providing policy advice to the Government’s ongoing reforms, such as:
* Creating a better environment for individuals to join the labor market, and improving the institutional framework for companies to start new businesses and to hire workers, and for labor to be mobile.
* Improving capacity of education authorities to assess quality of education and use information critically to improve the education system.
* Preparing a plan for restructuring the hospital network, and produce a better system to purchase and reimburse pharmaceuticals.
Some of the expected outcomes associated with the policies supported by the program are: (1) an increase in the employment rate to reach the targets of the EU Lisbon Agenda on Growth and Jobs; (2) creation of a rigorous system to identify problems in the quality of the education system, including through the participation in international assessment tests and introduction of the Matura; (3) a financially sustainable health system; and (4) a more efficient education system, with a decrease in drop-out rates and an increase in pupil teacher ratios to levels prevailing in most EU countries.
Promoting social inclusion by focusing on the youngest
The Social Inclusion Project, supported by a World Bank commitment of 40 million Euros, will increase the school readiness of children below the age of 7, targeting low-income and marginalized families (including children with disabilities and other special needs).
Despite strong economic growth and rising living standards in recent years, deep pockets of poverty and social exclusion continue to exist, including among the Roma minority. Children from poor families face a much greater risk of early drop out than the average Bulgarian child, often as early as after grade 4 of primary school. One of the reasons for early drop out is that children often are not fully prepared for school even in first grade, due in part to few children from poor backgrounds going to kindergarten.
Experience from around the world shows that early childhood education programs are the most effective intervention to promote social inclusion. The Social Inclusion Project supports an innovative school readiness program, with services to promote good parenting, parent counseling, and incentive measures to enhance participation in preschool programs of children from poor families.
The Project will finance the pilot phase of a national program which, following an impact evaluation, will be rolled out nation-wide with financing from the European Social Fund under Bulgaria’s "Operational Program Human Resources Development (OP HRD)." In addition to promoting a systematic approach to overcoming social exclusion, it aim to build Bulgaria’s capacity for using European Social Fund financing for social inclusion purposes. Project implementation is built around a partnership involving agencies across all layers of government, including central government and municipalities, as well as communities. Central government will set policy and manage the overall program, while municipalities will apply for project funding and subcontract service provision to non-governmental organizations, including community-based organizations.
"Social exclusion carries substantial economic costs for Bulgaria and it makes good economic sense to tackle exclusion now," said Florian Fichtl, the World Bank’s representative in Sofia. "Most importantly, Bulgaria loses out on a productive human resource which it cannot afford given the demographic decline. It is therefore important to tackle social exclusion strategically, right at the beginning of a person’s life through early childhood programs. It is part of Bulgaria’s long-term agenda of raising human capital and productivity – key to promoting convergence in living standards with its EU neighbors."
These loans are part of the program outlined in the CPS (2006-09) which is designed to help the country:
* Maintain macroeconomic stability through prudent economic policies and a business friendly environment to attract the investments required for high economic growth.
* Raise productivity by investing in human capital and modernizing related institutions.
* Provide efficient social services to help bring poor, vulnerable, and other excluded groups into the mainstream society.
The projects approved have a maturity of 17 years, including a five-year grace period.
