The European Commission recommended on Wednesday that Bulgaria take action to address several areas of macroeconomic imbalances in 2016 and 2017.

The proposal is part of the Commission’s 2016 country-specific recommendations which set out its economic policy guidance for the EU Member States for the next 12 to 18 months.

More specifically, the Commission recommended that Bulgaria achieve an annual fiscal adjustment of 0.5% of GDP towards the medium-term budgetary objective in 2016 and in 2017.

The EU executive also said that Bulgaria needs to further improve tax collection and take measures to reduce the share of the informal economy, including undeclared work.

With regard to the banking sector, the Commission said that by the end of 2016, Bulgaria needs to finalise the asset quality review and stress test of the country’s banks. Within the same timeframe Bulgaria needs to complete the balance-sheet review and stress test of the insurance companies and the review of private pension funds' assets.

The Commission also recommended that Bulgaria continue to improve banking and non-banking supervision.

Another recommendation concerns Bulgaria’s labour market and healthcare sector.

The Commission is of the opinion that Bulgaria needs to reinforce and integrate social services and active labour market policies, in particular for the long-term unemployed and young people not in employment, education or training.

Bulgaria also needs to establish guidelines and criteria for setting the minimum wage and increase the coverage and adequacy of the minimum income scheme, according to the Commission.

The Commission also proposed that Bulgaria enhance the efficiency of the health system by improving access and funding, and health outcomes.

Attention is also paid to the need to reform the insolvency framework to accelerate recovery and resolution procedures and improve their effectiveness and transparency.

To that end, the Commision recommended that Bulgaria increase the capacity of its courts regarding insolvency procedures, strengthen the capacity of the Public Procurement Agency and contracting authorities and improve the design and control of public tendering procedures.