Bulgarians Vote as Two Main Parties Locked in Dead Heat

Bulgarians began voting in an early election that has the Balkan country’s two main parties, Gerb and the Bulgarian Socialist Party, locked in a dead heat.

The polls opened at 7 a.m. Sofia time and are scheduled to close at 7 p.m. The Organization for Security and Cooperation in Europe and the Party of European Socialists have election monitors stationed at polls following reports of vote buying during presidential elections in October.

Bulgaria, the European Union’s poorest member, was thrown into turmoil in February by anti-austerity protests that echoed unrest across Europe. The next Cabinet needs to boost growth and continue budget cuts after unemployment rose to an eight-year high and violent rallies against poverty, graft and high utility bills led to the last government’s collapse.

“The elected parties will produce a very unstable Parliament and government,” Kolyo Kolev, head of the Mediana research institute in Sofia, said by phone. “These elections will be dirty, full of fear, pressured voting and vote buying.”

Former Prime Minister Boyko Borissov’s Gerb party, which lost control of the government on Feb. 20 amid the street protests, garnered 24 percent in an April 23-May 1 survey of 993 people by Gallup BBSS. The Socialists had the backing of 23.6 percent, according to the survey, which has a margin of error of 3 percent, implying a virtual tie.

Gerb, which stands for Citizens for the European Development of Bulgaria, would probably win about 100 seats in the 240-seat assembly, while the Socialists will take about 80 seats, Otilia Simkova, an analyst in Eurasia Group in London, said in a report, based on the recent polling.

Coalition Building

Gerb’s most likely coalition partner would be the Bulgaria for Citizens Movement of former EU Commissioner Meglena Kouneva, should it win the required 4 percent to enter Parliament, according to Simkova.

The Socialists, who have said former Finance Minister Plamen Oresharski would lead the government if they prevail, would probably forge a coalition with the ethnic Turk Movement for Rights and Freedoms and Kouneva’s party, Simkova said. The Movement representing ethnic Turks, would take 7.1 percent, while Citizens for Bulgaria would get 4 percent, according to Gallup.

“The coalition government that succeeds” the interim Cabinet “after the election, whatever its political makeup, is likely to preside over a change of policy emphasis, if not a complete overhaul,” the Economist Intelligence Unit said in a report on May 9. “It will probably give greater emphasis to tackling unemployment and promoting economic growth, without jeopardizing the country’s prized fiscal stability.”

Bulgarian Markets

The yield on Eurobonds maturing in July 2017 rose 4 basis points, or 0.04 percentage point, to 1.6752 percent at 5:17 p.m. on May 10.

The cost of insuring the country’s debt with credit-default swaps rose 1 percent to 93.99, after falling 8 percent on May 8, the lowest intraday level since Jan. 8, according to data compiled by Bloomberg. The Sofix stock index fell 0.24 percent on May 10 to close at 408.55, the biggest intraday decline since April 17, according to data compiled by Bloomberg.

Borissov, a former bodyguard of Bulgaria’s last communist dictator Todor Zhivkov and later of the former king and ex-Prime Minister Simeon Saxe-Coburg-Gotha, took 39.7 percent when he won elections in 2009.

Borissov’s support eroded as he was unable to turn around the living standards for Bulgarians, who have lived under strict fiscal and financial rules since 1997, when a crisis closed one-third of the country’s banks.

Flat Tax

Gerb has focused its campaign on keeping the flat 10 percent tax rate on personal and corporate income and freeing the energy market to reduce utility prices.

The Socialists want to scrap the flat tax and resume the construction of a 10 billion-euro ($13.1 billion) nuclear power plant at Belene by Russia’s Rosatom Corp., which Borissov’s administration canceled because of a lack of funds and investors.

Borissov was named in a two-week-old wire-tapping scandal involving tapes leaked to most Bulgarian media, including the Capital and Presa newspapers.

The tapes were allegedly of a conversation between Borissov, Sofia City Prosecutor Nikolai Kokinov and former Agriculture Minister Miroslav Naidenov on interference with an abuse-of-power probe against Naidenov. Kokinov resigned on April 27, a day after tape transcripts were published.

While none of the three have denied the authenticity of the tapes, Borissov questioned the source, saying it was unlikely a police officer, as reported by media, but rather a member of the Socialist Party.

Energy Protests

Public outrage over the state of the economy and spending cuts spilled over into energy policy initiating prosecutor’s investigations of CEZ AS, the biggest Czech utility, Austria’s EVN AG (EVN) and Prague-based Energy-Pro, which control Bulgaria’s

Bulgaria’s energy regulator moved to cancel CEZ’s power distribution license on Feb. 20, gave CEZ the option to fix the suspected 21 violations and will rule on the license in June after additional checks.

“The new government is unlikely to pursue nationalization, as demanded by some protesters, but will focus on increasing competition and improving the business environment to attract investors,” the EIU said.

To contact the reporters on this story: Elizabeth Konstantinova in Sofia at ekonstantino@bloomberg.net; Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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