This study is intended to examine the influence of the current worldwide financial and economic crisis on financial decentralization process in Bulgaria and identify the answers of the central and lo-cal governments to the critical situation in the context of specific conditions of the national economy and the stage of financial decentralization reform. Analysis is focused on dynamics of the main macroeconomic indicators, based on fact figures for the period 1990–2009 and forecast for the period 2010-2011, and its impact on the public finance. The most important actions, taken by the national government to consolidate the crisis are described and evaluated on the base of their effects on the lo-cal finance. A comparison is made between the loss of Bulgarian economy in the beginning of transition (1991-1993), during the financial crisis in 1996-1997, caused by credit crunch and series of bank bankruptcies, and the current financial and economic crisis. Finally, some conclusions and pol-icy recommendations are outlined, intended to improve crisis management in Bulgaria both on the national and local level.