Bulgaria: April elections set to result in fragmented parliament, but unlikely to lead to significant shift in economic policy
March 3, 2021
On 4 April, Bulgarian voters will head to the polls to elect their new parliament. Although the ruling center-right party Citizens for European Development of Bulgaria (GERB) is currently leading the polls ahead of its closest rivals, the center-left Bulgarian Socialist Party (BSP), it is unlikely to obtain an outright majority. A fragmented parliament and a lengthy government formation are to be expected. That said, the outcome of the elections should not lead to a significant shift in economic policy nor in the country’s commitment to the EU.
Recent polls show that GERB, led by Prime Minister Boyko Borisov, who has dominated Bulgarian politics for over a decade, is leading with almost 30% of support (versus around 25% for the BSP). Following intense anti-corruption protests demanding the government’s resignation last summer, GERB has regained popularity amid its handling of the Covid-19 health crisis. The government began to gradually lift restrictions in February, which is set to continue further into March and April. Moreover, financial support for businesses affected by the pandemic has also picked up recently, likely earning the government more support. Meanwhile, the BSP is reportedly torn by infighting and has lost some favor with voters in the most recent polls ahead of the elections.
However, neither of the main parties are likely to win an outright majority in the upcoming vote, with the most likely result being a fractured parliament made up of between five and seven parties. Commenting on this, analysts at Fitch Ratings reflected:
“There is high uncertainty at present about the shape of the next government, but issues around rule of law, institutional quality and corruption have taken centre stage. Although government formation could take time and a multi-party coalition could prove highly unstable, at present Fitch does not see major risks to economic policy or to Bulgaria's commitment to the EU. That said, the next government will likely face pressures to implement political/institutional reforms in order to avoid social protests similar to those in summer 2020.”
Moreover, irrespective of the outcome, Fitch Ratings sees little impact on fiscal policy, adding:
“The upcoming legislative elections pose limited downside risks to the medium-term fiscal outlook, with commitment to fiscal prudence well entrenched across the political spectrum.”
Author: Hanna Andersson, Economist