Event

Early elections took place on 12 May 2013, following the resignation of the centre-right government (GERB) after massive and violent demonstrations had erupted last winter in a protest against high energy prices, alleged corruption of the political class and low living standards. The election campaign was tainted by wiretapping scandals involving the former interior minister Tsvetanov and suspicion of massive electoral fraud as the day before the vote, 350,000 illegally printed ballots were discovered at a printing plant whose owner is reported to be close to GERB. In spite of those affairs, GERB still won 31% of the vote against 27% for the Bulgarian Socialist Party (BSP). The Turkish minority (economically liberal) party DPS came third with about 11%, followed by Ataka, an ultra-nationalist group which took 7%. These results appeared inconclusive at first since no party  was ready to join GERB in a coalition. Finally, a BSP-led (partially technocratic) government also including the DPS party was installed on 29 May. The new coalition in place will be backed by 120 out of the 240 MP, therefore not having the majority.

Impact on  country risk

As the new PM Oresharski government is supported by a hung parliament, its grounds are very shaky and its room for manoeuvre to implement broad-scale reforms and maybe the electoral promises of a progressive taxation system (instead of the current flat rate of tax) and increased social spending, is rather limited. However, the new coalition is not thought to let slip the public deficit, considering Oresharski’s reputation for fiscal discipline while serving as former finance minister under the last 2005-2009 BSP-led government. Besides, in a first statement, the new finance minister assured that the peg to the euro was his priority. Overall, centrist approach is expected to be taken on key economic policies.

Analyst: Florence Thiéry, f.thiery@credendogroup.com