Abstract

Economic and political transformation in Bulgaria has been rather uneven and often changed direction. Compared to the countries in central Europe, it took much longer to define the course of reforms and until 1997 Bulgaria was a laggard in the reform process. In 1996–97 the deepening macroeconomic imbalances escalated into a severe financial crisis combining a crash in public finances, a run on the banks and a collapse of the currency, all of which gave rise to a hyper-inflationary hike in early 1997.