Bureaucracy, corruption and inefficient state administration are the main obstacles for doing business in Bulgaria, according to a risk scenario watchlist for country by the Economist Intelligence Unit (EIU).

EIU expects Prime Minister Boyko Borisov's centre-right party, Citizens for European Development of Bulgaria, to continue to govern alone throughout the 2010-11 forecast period.

The EU will keep Bulgaria under close scrutiny, continuing to demand judicial reform and results from efforts to combat corruption and crime, which presents some risk to political stability, the analysts say.

The Economist Intelligence Unit (EIU) expects Bulgaria's economy to contract by 0.1% in 2010, before growing by 2.6% in 2011.

The experts from The Economist's analytical unit cite the reduction in the current account deficit as the only positive consequence from the crisis for the Bulgarian economy.

They explain that owing to a sharp contraction in domestic demand due to restrictions in external financing, the economy has contracted and the current-account deficit has narrowed.

EIU does not assume that the country will require some financial assistance from the IMF.

Earlier in the week the International Monetary Fund projected Bulgaria's economy to grow from 0% to 0.4% in 2010 as the country is going through its first recession in twelve years.

The Washington-based lender projects this year's inflation to be moderate, while the current account deficit is expected to fall below 3% of gross domestic product.

According to IMF experts Bulgaria's economy will gain momentum next year and may expand by 2%-2.5% on an annual basis.

Bulgaria aims to have a budget deficit of 2.5% of gross domestic product and a growth of 3.6% in 2011, according to the budget draft. The economy contracted by 5% in 2009.

The European Union's poorest country is currently going through its first recession in 12 years after a three-year lending boom stalled and foreign investments dried up.

Earlier this year, the government adopted a package of austerity measures, freezing public pays and pensions in a bid to reduce the bloating deficit.

It revised up to 1% its economic growth forecast for this year, pinning its hopes on increasing exports.