site.btaInnovation and Growth Minister Donchev: Recovery and Resilience Plan Tests the State

Bulgaria’s management of the National Recovery and Resilience Plan (NRRP) proved more challenging and complex than first expected, outgoing Innovation and Growth Minister Tomislav Donchev said in an interview with BTA on Tuesday.

He added that the NRRP, within the current seven-year European Union programming period, tested whether the State could think and act strategically amid external pressure and internal instability, as it required reforms in a short time that normally took years.

Formulating, programming and managing the NRRP required vision, coordination between institutions and consistency in implementation. A key challenge throughout the process was also the willingness to pay the political price of reforms, which called for political maturity, a search for consensus and difficult decisions amid frequent changes of government and limited continuity, Donchev noted.

In his view, the durability and effectiveness of reforms, and the changes they delivered, depended on political leadership and accountability. That is why reforms should not be treated as a purely technical exercise delegated to the administration. More broadly, Donchev added, the NRRP also underscored that European instruments cannot substitute for a national development vision.

He said some of the lessons linked to the NRRP were already understood, but the process was far from over. The real yardstick, in Donchev’s view, was not the formal end of the NRRP [the final deadline for eligible spending under the EU Recovery and Resilience Facility (RRF) is August 31, 2026], but whether the experience gained turned into more mature governance practices and a clearer ability to make strategic choices in the future.

Donchev also described the institutional role of the Ministry of Innovation and Growth and its part in managing Bulgaria’s industrial policy. He emphasized the importance of the programmes administered by the ministry in restructuring the national economy, including the Research, Innovation and Digitalization for Smart Transformation Programme and the Programme Competitiveness and Innovation in Enterprises. Donchev also discussed the broader economic transformation process, highlighting domestic consumption and European funds as key growth drivers. In addition, he outlined Bulgaria’s position in the debate on the future of EU cohesion and agricultural policy.

Below is the full text of the interview:

Deputy Prime Minister, has the Ministry of Innovation and Growth (MIG) found and consolidated its institutional place in the State administration?

The Ministry of Innovation and Growth is a relatively new institution, so questions about its position and role are entirely natural. I was initially sceptical about whether separating it from the Ministry of Economy would prove effective, because establishing a ministry in itself does not guarantee innovation, I have said this more than once. Its primary mandate is to consolidate policies that were previously fragmented and to translate European funding into tangible economic results.

MIG began building its institutional profile mainly through managing programmes for competitiveness, innovation, and growth. This is crucial, because it is precisely in this area that we can assess whether the administration can act swiftly, predictably, and in the interests of business. An institutional role is not “given”; it is earned—through capacity, coordination, and results. Ultimately, MIG’s success will not be measured by administrative frameworks, but by whether they deliver more investment, higher productivity, and genuine modernization of the Bulgarian economy.

How would you assess MIG’s work in carrying out its task of implementing and steering Bulgaria’s industrial policy through attracting foreign investment and funds under the European funds and the EU Recovery and Resilience Facility (RRF)?

Industry remains fundamental to Bulgaria’s economic development, it is the backbone for building high value added and integrated production. Our task is not only to secure European funding, but also to direct it toward tangible, sustainable investments that create jobs and modernise the industrial sector.

In practice, European funds serve two main functions. First, they provide resources for key foundations of industrial development, such as infrastructure, energy efficiency, digitization, and innovation. Second, they signal credibility to investors and help mitigate initial investment risk. It is often this second function that proves decisive for industry’s long-term outcomes.

In this context, the evaluation of an institution responsible for designing and steering industrial policy should be grounded in clear principles and properly reflect its role and responsibilities. The State’s task is not to replace the market or make investment decisions on behalf of businesses, but to articulate a coherent vision, define priorities, and structure public instruments in a way that enhances predictability and reduces investment risk. European funds and the Recovery and Resilience Facility (RRF) are key resources in this process, both in providing the enabling conditions for industrial development and in sending a credible signal to investors.

Ultimately, when measured against actual business turnover, EU funds account for a negligible share. At best, they can serve as a catalyst that, if used wisely, helps trigger the desired “reaction.” European instruments play a similar role in relation to foreign direct investment: they can facilitate the process, but they are rarely decisive. Investors base their decisions primarily on human capital, infrastructure, regulatory stability, and a clear long-term strategic direction. European financing can reinforce these fundamentals, but it cannot substitute for them.

That is why an honest assessment of industrial policy implementation should not be based on the volume of funds attracted, but on outcomes: whether the industry becomes more technologically advanced, whether it creates sustainable employment, and whether Bulgaria integrates more effectively into European and global value chains. This is the true measure of the impact of European instruments and foreign investment.

Bulgaria “absorbs” or “invests” European funds – is there a difference between the two formulations, and which is the valid one today?

That’s a good question. I have never liked the term “absorption” when it comes to funding. As long as our primary focus is on absorbing EU funds, all we will do is absorb. It’s not that we don’t need the money, but above all we need ambitious goals. Only then should we consider how to secure the resources to achieve them.

The difference between “absorption” and “investment” is not merely a matter of terminology, but a substantive one. “Absorption” emphasizes compliance with rules, procedures and deadlines, and whether funds are disbursed correctly and on time. This approach was entirely logical and necessary in the first years after our EU accession, when the priority was to close infrastructure gaps and build administrative capacity.

The problem arises when this approach becomes a durable managerial habit. When the central question is “how do we absorb the funds” rather than “what do we want to achieve with them,” European funding starts to function as an end in itself rather than as a tool for change. Not because the money isn’t necessary—it is—but because we lack a clear strategic framework to align those resources with long-term objectives.

This is precisely where the new European instruments, above all the National Recovery and Resilience Plan (NRRP), have changed the logic. They do not fund spending as such; they are conditional on measurable results and genuine reforms. Change starts when the State uses European funds not as a substitute for vision, but as leverage to pursue longer-term, more ambitious objectives. This requires, first, clearly defining goals; then selecting the appropriate policy measures; and only then securing the resources needed to deliver them.

Are the necessary institutional and infrastructure prerequisites in place to ensure that the restructuring of the national economy is irreversible and accelerated, and to support its digitalization and decarbonization?

Over the past twenty years, Bulgaria has integrated into EU markets through entrepreneurial talent, hard work, and perseverance, while keeping low operating costs as its main competitive advantage. While this model has served its purpose, it has now run its course. If we want to move up to a higher tier, achieving higher incomes and stronger budget revenues, we must take on the difficult task of climbing the value chain toward higher value added. This is far more complex and cannot be reduced to digitalization and decarbonization. They are certainly part of the process, but it also requires: upskilling the workforce; strengthening business infrastructure (industrial zones); building innovation infrastructure (access to specialized laboratory equipment, supercomputers, and AI-based services); improving both horizontal and vertical integration of the economy; and, above all, setting more ambitious goals. Bulgaria’s ambition cannot be to produce a cheaper gearwheel; we must scale up the capabilities we have already developed in areas such as space, drones, robotics, mechatronics, optics, electronics, and more.

The plan was for Bulgaria to have nano- and microsatellites in orbit by 2027. Funding has been secured, and I hope this will be achieved.

Which measures already implemented, or pending implementation, would you highlight as essential to the digital and green transformation of the Bulgarian economy?

If we proceed within that framework, it is more important to speak not about all measures, but about those that in practice begin to change the behaviour of economic actors.
First, I would highlight the measures that encourage the digital modernization of enterprises – especially in manufacturing. They matter not because they introduce technologies as such, but because they change management, the organisation of processes, and the integration of firms into value chains. Where this happens, digitization is no longer an “IT project”, but part of the business model.

Second, important are the measures that link the green transition to economic logic – investments in energy efficiency and renewables that reduce costs and increase predictability for business. When these investments are tied to technological renewal and modernization of production, they begin to have a real structural effect rather than remaining merely an environmental measure.

Third, the importance of measures targeting skills and human capital is becoming increasingly clear. This is where the digital and green transformation meets the restructuring of the economy. Without people who can work with the new technologies and processes, even the best investments remain only partially utilized.

Finally, although they often remain in the background, measures for digitization of the administration and improving the regulatory environment also play a key role. They do not drive the transformation directly, but they create the conditions for it to be faster, more predictable and less risky for business.

Support for the digital and green transformation, especially for small and medium-sized enterprises, remains among the leading priorities. It is implemented both through non-repayable financial assistance and through financial instruments aimed at increasing competitiveness and business resilience.

Under the Research, Innovation and Digitization for Smart Transformation Programme, a procedure is currently open for green and digital partnerships with a budget of BGN 61 million. It encourages cooperation between enterprises and research organisations to develop and introduce innovative digital and environmental solutions with market potential.

Under the Competitiveness and Innovation in Enterprises Programme, the first contracts for the development and implementation of innovations in enterprises are already under way, with priority areas including “Informatics and ICT” and “Clean technologies, circular and low-carbon economy”. In 2025, additional procedures in this direction were announced with a total budget of over BGN 310 million – two aimed at increasing the level of digitization of enterprises and one focused on energy efficiency, the use of renewable energy sources and energy storage technologies. Business interest in these measures was significant. Next year, a new measure is planned to accelerate the transition to a circular economy and increase resource efficiency in enterprises through the introduction of green technologies. It will be implemented through the integrated territorial investments approach with a budget of BGN 162 million. In addition, BGN 59 million will be directed towards the development and production of clean and resource-efficient technologies of critical importance, as well as investments that contribute to strengthening strategic value chains.

Why is Bulgaria’s national sovereignty in artificial intelligence important?

Without it, the State loses its capacity to govern, assume responsibility, and safeguard the public interest amid profound technological dependence—a situation akin to entering into contractual obligations whose underlying logic it does not fully understand, while bearing the full consequences at its own expense.

Soon, societies, nations, and economies will be divided into two groups: users of AI-based services and developers of AI models and services. I believe our ambition should be directed toward the latter. Despite the INSAIT Institute’s global achievements, we are only at the beginning of building sovereign AI capabilities. Earlier this year, we successfully developed and secured approval for a project to build a new Discoverer supercomputer equipped with state-of-the-art GPUs. Its new hybrid architecture delivers a multiple-fold performance increase for artificial intelligence, machine learning, and large-scale data processing workloads.

Domestic consumption and expenditure financed by European funds and the EU Recovery and Resilience Facility are often cited as the two main drivers of Bulgaria’s economic growth. Is this thesis still valid?

Domestic consumption depends on incomes, inflation, and demographics and, on its own, cannot sustain stronger, lasting growth unless accompanied by higher productivity. European funds also have a significant impact, but it is increasingly less about their size and more about how effectively and quickly they are absorbed, which investments they finance, and whether they are tied to meaningful reforms and high-quality projects.

That is why today it is more appropriate to describe these two factors as stabilizing and supportive drivers, rather than as a sufficient basis for long-term growth. They help the economy maintain momentum during more challenging periods, but on their own they cannot address structural problems. To achieve sustainable growth over the longer term, we need stronger private investment, technological modernization, and more effective use of human capital. In other words, the thesis still accurately describes current dynamics, but it is no longer sufficient as a strategy for future development.

Do you anticipate any changes in Bulgaria’s position in the debate on the Multiannual Financial Framework and the future of cohesion and agricultural policies?

I believe that, as we stand on the threshold of our fourth programming period within the European Union, we have already accumulated sufficient experience and confidence to articulate our national position more assertively and to defend it consistently, with solid arguments, before the other Member States and the European Commission.

We mobilized our efforts to formulate a strategically oriented national position, highlighting our main priorities in the negotiation process as well as our red lines. I believe we accomplished this task successfully.

We presented clear and unequivocal arguments on all key aspects of our position, both regarding the risk of weakening Cohesion Policy and the Common Agricultural Policy, and the proposed overly complex implementation architecture, and the semi-mechanical blending of two largely incompatible approaches: results-based and expenditure-based implementation.

We also clearly set out our objections to the introduction of a cap on allocations, which undermines the fairness of the methodology for distributing funds among countries, as well as to the exclusion of Black Sea border regions from eligibility for additional compensation to address the consequences of the war in Ukraine.

Equally important, we succeeded in opening this process beyond the administration: Bulgaria’s national position on the European Commission’s proposal for the next programming period was developed through active dialogue with local authorities and the social partners. The good news is that our views on all key issues align, and the main elements of our position are, in practice, based on consensus. This gives me confidence that Bulgaria can defend its priorities consistently and coherently in all fora: within the Council of the EU, the Committee of the Regions, and the European Economic and Social Committee.

At the same time, it would be strategically shortsighted not to show a degree of flexibility in negotiations. Experience has taught me that every country has a chance to secure outcomes that serve its interests, provided it has strong arguments and reliable allies. We must defend our position by clearly and unequivocally defining our red lines, while also negotiating effectively by building coalitions with like-minded partners on each issue. Failing to adjust our approach as negotiations evolve would leave us isolated and deprive our country of key levers of influence.

One more very important point: negotiations on the legislative package are only one piece of the puzzle. Equally important is how we conduct the programming process. That will be the true test of whether we have learned the lessons from implementing the National Recovery and Resilience Plan (NRRP). The lack of political stability and insufficient resolve to deliver the Plan’s reforms caused such serious delays that, over the past year, we have had to work in catch-up mode and constantly “firefight”. Therefore, when programming for 2028–2034, we must set objectives more strategically, embed meaningful reforms and realistic, deliverable results, and ensure that municipalities, citizens and businesses are not held hostage to political instability or to an inability to implement reforms at national level.

The past seven-year period, encompassing the drafting and implementation of the National Recovery and Resilience Plan, has been particularly challenging for Bulgaria. What lessons should be drawn, and to what extent has the political class absorbed them?

This period was indeed challenging for Bulgaria and, in many respects, proved more complex than it initially appeared. The drafting and implementation of the National Recovery and Resilience Plan became a serious test of the State’s capacity to think and act strategically amid external pressure and internal instability. For countries like Bulgaria, the weight of the NRRP exceeded that of traditional EU instruments, not only because of the scale of the funding, but also because it required reforms within a short timeframe that would normally take years.

The first major lesson is that the NRRP is not merely a financing programme. It demands a clear vision, effective inter-institutional coordination, and consistent implementation. This is precisely where a long-standing weakness became apparent: the lack of stable political and institutional capacity to pursue complex policies beyond the short-term political cycle. The Plan did not create this problem, but it brought it sharply into focus.

The second key lesson is that the main challenge was not the funding itself, but the willingness to pay the political cost of reforms. For the first time, European financing was directly tied to concrete legislative and institutional changes. This demanded political maturity, consensus-building, and the readiness to take difficult decisions: particularly challenging amid frequent government changes and limited policy continuity.

The process also revealed something important: reforms cannot be “implemented” solely by experts. The administration can design and execute them, but lasting change requires clear political leadership and accountability. When reforms are treated as a purely technical exercise, their impact remains limited and difficult to sustain.

More broadly, the NRRP reminded us that European instruments cannot substitute for a national development vision. They can accelerate change, but only when embedded in a clear and shared strategic direction. When such a vision is missing or shifts with each political cycle, even the most robust instrument can generate tension instead of delivering sustainable outcomes.

As for the extent to which these lessons have been learned, the answer must be cautious. Some have already been acknowledged, but the process is far from complete. Whether the most important lessons have truly been absorbed will become evident in how the Plan is governed and implemented over the remaining period. The real test will not be the formal completion of the NRRP, but whether the experience gained is translated into more mature governance practices and a stronger capacity for strategic decision-making in the future.