Bulgaria: July snap election expected to result in lengthy government formation; unlikely to change commitment to the EU
On 11 July, Bulgarian voters will return to the polls to elect their new parliament, after the April vote failed to produce a government. While the center-right party Citizens for European Development of Bulgaria (GERB) and the anti-establishment party There Is Such a People (ITN) are currently in a tight race at the top of the polls, the result remains uncertain and no clear winner is expected, with government formation projected to take a long time. Despite elevated political fragmentation and complicated decision-making, the outcome of the elections should not lead to a significant shift in economic policy or affect the country’s commitment to the EU.
Recent polls show that GERB, led by former Prime Minister Boyko Borisov—who has been a dominant figure in Bulgarian politics for over a decade—has around 22% of the support. ITN, led by talk-show host Slavi Trifonov who is running on an anti-establishment and anti-corruption agenda, is following closely behind with around 21% of the support. Although GERB won the most votes in the April election, it was unable to gather enough backing to form a government as many parties refused to cooperate due to widespread public anger over endemic graft. Moreover, the party has recently lost further support after the U.S. imposed sanctions on two businessmen, as well as on several former and current officials, at the beginning of June.
While no party is likely to win an outright majority in the upcoming poll, policy continuity is broadly expected once a new government is eventually formed, as noted by analysts at Fitch Ratings:
“All parties, including those that are anti-establishment, see significant benefits to investment and growth from upcoming EU funding programmes. Cross-party consensus on euro adoption is similarly broad, as is commitment to fiscal prudence and the currency board framework. Indeed, questions around the rule of law, institutional quality and corruption have become central to domestic politics, which could help accelerate reforms in these areas, which lagged under the outgoing government.”
Meanwhile, graft problems are set to be long-standing, as Rory Fennessy, assistant economist at Oxford Economics, highlighted:
“A victory for an anti-corruption coalition could have positive implications for the medium-term outlook, but corruption issues will remain.”