Bulgaria's economy will grow 0,3% after a 5,1% contraction in 2009 as investments dwindled and consumption shrank, a local think-tank estimated.
The country will manage to achieve a growth of 3.8% in 2011 thanks to a rise in exports, according to the Agency for Economic Analyses and Forecasts.
Bulgaria aims to have a budget deficit of 2.5% of gross domestic product and a growth of 3.6% in 2011, according to the budget draft.
The country is planning to sell bonds amounting to EUR 1 B on the international market in 2011 to shore up its finances, according to the draft paper.
Bulgaria's seasonally adjusted gross domestic product marked an increase of 0.5% in the second quarter compared to the first three months of the year thanks to a rise in exports, pulling the country out of recession, the prime minister announced earlier this week.
Bulgaria, the European Union's poorest country, faced its first recession in 12 years after a three-year lending boom stalled and foreign investment dried up. The recovery of the economy, which operates in a currency board regime, is lagging behind that of other Eastern European countries.
Bulgaria's economy contracted by 3.6% on an annual basis in the first quarter of 2010 from 5,9% in the previous quarter, but the government hopes for a 1% economic growth for this year as recovering exports bolster the expansion.
The gross domestic product shrank 1.4% year-on-year in the second quarter, slightly milder that the 1.5% drop forecast by a flash estimate, the statistics office said at the beginning of September.
Bulgaria boasts one of the lowest public debt-to-GDP ratio among European Union member states at about 15%.
Economists are cautious in their forecasts for Bulgaria's economy and say it will remain in recession or be about zero this year.
The European Commission said last month that Bulgaria's economy is likely to start to recover towards the end of 2010 under the impact of the international cycle.