Bureaucracy, corruption and weaknesses in the labor market are some of the key obstacles that hinder businesses and economic growth in Bulgaria, according to a report released here on Thursday.

The European Commission (EC) staff working document said that Bulgarian economy has been gradually emerging from the crisis, and the authorities have embarked on a set of wide-ranging financial sector reforms.

However, bureaucracy, corruption and policy instability are considered to be among the strongest obstacles to doing business in the Balkan country, the report said.

"Procedures are complex, lengthy and relatively costly, in particular for enforcing contracts, trading across borders and connecting to the electricity grid," the report said.

According to the report, a certain lack of stable and consolidated legislation leads to legal uncertainty and non-transparent and unpredictable procedures.

"Concerns about the independence, quality and efficiency of the judicial system, including a certain lack of predictability due to inconsistent rulings, may hamper investment," the report said.

Lengthy insolvency procedures lead to a loss of value for both debtors and lenders, and this creates uncertainty and reduces the country's overall attractiveness to investors, the document said.

Furthermore, the lack of procedures allowing national companies to directly transfer their registered office in and out of Bulgaria is an additional barrier to investment, it added.

Meanwhile, remaining weaknesses in the labor market continue to hinder growth and limit the adjustment capacity of the economy, the report said.

"The structural nature of long-term unemployment, a shrinking and ageing labor force, low labor market participation and skills mismatches hamper labor market adjustment, with particular impact on youth and long-term unemployed," it said.

Moreover, the persistently high share of undeclared work distorts the labor market and also reduces fiscal revenue, said the document, which does not constitute the official position of the EC, nor does it prejudge any such position. Endit