Effectiveness of Minimum Income Support in Bulgaria: A Microsimulation Analysis of 2023 Reform of the Monthly Social Assistance Benefit

Over 15 years since the EU integration of Bulgaria an ambitious reform has been introduced in 2023 regarding the minimum income protection scheme operated within the social policy mix, namely the Monthly Social Assistance (MSA) benefit. The reform addressed European Council’s country specific recommendations (CSRs) to Bulgaria within the framework of the European Semester and had several ambitious goals, among which to improve benefit coverage, adequacy, and targeting. The long years maintained MSA scheme had limited reach due to many strict eligibility criteria so the reform aimed in expanding the inclusion of more vulnerable individuals and families. Besides, the monetary values of the benefit were previously not indexed to inflation as well as outdated means-test thresholds were implemented. From this point of view, the 2023 reform sought to tie the benefit amounts to the national poverty line in order to make them more responsive to the rapidly shifting economic circumstances since the 2022 energy crisis and related inflationary pressures. Moreover, the introduction of annual adjustment aimed in improved reflection of MSA regarding the needs of different groups (e.g., elderly, disabled, single parents). The microsimulation analysis of such effects expected to be achieved by the 2023 MSA reform is performed for the period 2023-2025 using the Bulgarian component of EUROMOD: the tax-benefit microsimulation model of the EU. Most up-to-date dataset is utilized, derived from SILC 2023 survey measuring the incomes for year 2022. Particular indications for the shifts in selected poverty and inequality indicators are evaluated, having in mind that the reform was intended to narrow the poverty gap and improve social inclusion.