ABSTRACT
The Bulgarian economy's path was determined by two factors: first, the inherited initial economy's conditions during the end of the 80s and second, the lack of vision for a comprehensive structural reform and permanent political hesitations. Liberalization, privatization and restructuring, the main tenets of transition, became the objects both of struggle between conflicting interests and the site of the struggle for economic power by various social groups. The culminating point of the downward 'Bulgarian transition' was the financial crisis of late 1996 and early 1997. The Bulgarian economy experienced a period of hyperinflation, depletion of foreign exchange reserves, closure of 14 banks that had held 25% of the consolidated balance sheet of the banking system and flight from the national currency. The main challenge that the Bulgarian economy has faced since 1997 is the transition from a stage of financial stabilization to sustainable growth.
