Bulgaria stands a better chance of emerging relatively unscathed from the current international economic crisis than many other countries, according to Richard W. Rahn, a senior fellow at the Cato Institute and chairperson of the Institute for Global Economic Growth.

Writing in The Washington Times, Rahn cites Bulgaria’s flat tax of 10 per cent on personal and corporate income as an outstanding success, which, he says, “many who initially opposed it now claim to have supported all along”. Rahn also points to Bulgaria’s enviable eight per cent budget surplus as a sign of economic wellbeing. Translated in US terms, this – he points out – would be equivalent to an American budget surplus of one trillion dollars.

Rahn claims that these competitive measures mean that the Bulgarian economy “will grow about four times faster than the EU average”. He also says that the so-called underground economy has been reduced.

Bulgarian banks, according to Rahn, are required to keep adequate reserves (which now average 13 percent, about double the U.S. average), and are therefore in a stronger position to weather the international financial crisis. According to Rahn, many more people are now seeing the benefits of investing in Bulgaria, citing Hewlett Packard’s decision to transfer 100 jobs from India to Bulgaria.

He concludes that Bulgarians’ experience of communism makes people more realistic about the limits of government. “Many Bulgarians and other peoples who had experienced full socialism and communism understand the dangers of too much government more than all too many Americans,” he says.

Rahn's connection to Bulgaria dates back to 1990, when he was at the helm of a group of Western economists invited by then-prime minister Andrei Loukanov to draft a strategy for Bulgaria's transition to a market economy, which is still blamed by many Bulgarians for the difficult transition of the 1990s.