This report provides estimates of the level poverty and changes in living conditions between 2003 and 2007 in the new European Union (EU) member state Bulgaria. This report fills key gaps in the understanding of the state of welfare in Bulgaria and its future trends. It provides an assessment of changes in living standards since 2003, a period of sustained robust growth and intensive reform efforts leading to successful EU accession, and the current profile of the poor. The report quantifies the level of deprivation and the gains in poverty reduction and overall welfare improvements in different segments of Bulgaria's population. The study aims to support policy discourse on poverty reduction and strengthening of social protection by providing a robust assessment of living conditions among various individual, household, geographic, and socioeconomic groups and of the actual and likely future effectiveness of current poverty reduction policies. The report is organized as follows. Section two examines welfare trends between 2003 and 2007, decomposes changes in poverty, and links poverty outcomes to growth. In section three, the poverty profile is presented based on the results of the 2007 Multitopic Household Survey (MTHS) data. Correlates and determinants of consumption expenditures are presented in section four. Annex A provides a detailed account of the concept of poverty and the methodology used for measuring poverty in this report. Annex B presents supplementary data.