Bulgarian PM Seeks to Defy Past Failures With New Coalition

Updated on
  • Lawmakers confirm cabinet, with EU presidency to come in 2018
  • Borissov’s two previous governments collapsed prematurely

Bulgaria’s parliament gave the go-ahead to Prime Minister Boyko Borissov to head his third government in eight years, though uncertainty remains as to whether his coalition with a loose alliance of nationalist parties will last to serve a full term.

Lawmakers voted 133-101, without abstentions, to back the Gerb party’s cabinet with the United Patriots, Parliament Speaker Dimitar Glavchev said Thursday in the assembly in Sofia, the capital. The European Union’s poorest member is preparing to take over the bloc’s rotating six-month presidency in January, a key part of the window during which the U.K. will hold Brexit negotiations.

The nation of 7 million people is looking to end the political upheaval that’s brought a spate of elections and restrained investment as governments are wobbling across Europe’s former communist east, from the Czech Republic to Croatia and the Republic of Macedonia. The 57-year-old former body guard, whose previous administrations collapsed, must balance the Patriots’ desire to revive ties with Russia, and his party’s aspiration to deepen Bulgaria’s EU integration.

“I don’t see much hope for the government to fulfill its full term in office,” Lyubomir Mitov, UniCredit’s CEE chief economist, said by phone from London. “They don’t have much in common. There’s no pro-reform political force in parliament. Everything will be a matter of negotiations.”

Pensions, Euro

The two parties plan to keep the lev-euro peg, maintain the 10 percent flat rate of income tax and boost economic growth, which reached 3.4 percent last year. Other priorities include wage and pension increases, and joining the pre-euro exchange-rate mechanism, ERM-2. The yield on Bulgaria’s euro-denominated bonds due 2024 fell two basis points to 1.48 percent at 5:51 p.m. in Sofia, data compiled by Bloomberg showed.

Efforts to join the euro-area and the European Central Bank’s Single Supervisory Mechanism “will continue through silent diplomacy and convincing our partners that we’re ready to become part of the European financial infrastructure,” Finance Minister Vladislav Goranov told reporters. A planned pension increase won’t affect this year’s budget deficit, forecast at 1.4 percent of economic output, he said.

Borissov resigned in November, with two years of his cabinet’s term remaining, after his party’s nominee lost the presidential vote against Rumen Radev, a U.S.-trained former Air Force chief backed by the Socialists. His first government fell in 2013 after mass anti-austerity protests.

Parliament also approved Vladislav Goranov as finance minister and reinstated several ministers who served in Borissov’s previous cabinet. The Patriots have two deputy prime ministers, Valeri Simeonov, in charge of economic and demographic policy, and Krassimir Karakachanov, who’ll also serve as defense minister.

One of the new government’s first tasks will be to start talks on the delivery of fighter jets after the previous administration ranked Saab AB’s offer first. Borissov pledged to curb illegal migration, strengthen the country’s borders, fight graft and adhere to the Black Sea nation’s commitments to the EU and NATO.

(Updates with markets in fifth paragraph, finance minister in sixth.)
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