Budget Constraints of Bulgarian Enterprises , 1996 – 97

This paper aims to examine the major financial flows between non-financial enterprises outside the budget sector and other sectors of the Bulgarian economy, in particular the financial sector and the government budget, as well as the financial flows within the enterprise sector itself during the crisis period in 1996–97. In doing so, we shall answer the question of whether or not the real sector of the economy was functioning under soft budget constraints during that time. We further investigate the ways in which the budget constraints of the enterprise sector were softened as well as assessing the contribution of the enterprise sector to the aggravation of the 1996 crisis. JEL classification: P31, P34, G21, G30.