site.btaMedia Review: June 2

POLITICS

The efforts to form a government continue to dominate media on Friday.

For nearly a month Bulgaria has been in a zone of very high political turbulence, according to an extensive analysis by Capital Weekly into these developments, their implications and the political shift that is taking place.

Forming a government can help stabilize the situation, but the question is who will favour from it after secret recordings, political intrigue, dramatic revelations, bombings and assassinations in just three weeks shook the state at all levels.

Last Friday, a recording of a meeting of the National Council of Continue the Change was made public by former MP Radostin Vassilev of the same party, which upturned the political. On Saturday, outraged by the content of the recording, GERB gave a briefing, announcing that they were freezing the negotiations for a government. Moreover, the leaked recording served as a coordinated attack mainly on Continue the Change by various institutions - the presidency, the security services, the prosecution and parliamentary political forces, among the most vocal of which were the Movement for Rights and Freedoms (MRF) and There Is Such a People (TISP). The attack was set off by the President, who when handing the mandate to Continue the Change on Monday advised them not to carry it out. Against this backdrop, GERB thawed talks on the formation of a cabinnet, and on Wednesday a meeting of the GERB and Continue the Change-Democratic Bulgaria for a rotating prime minister was held along with the leaders of the two formations.

Analyzing the risks and opportunities for Democratic Bulgaria and Continue the Change. Capital Weekly writes that they have a chance for serious change, but also a chance for major failure. 

If they form a government, the first two political parties will have a majority of 132 MPs, which is enough to push through any legislative changes and important governance decisions. The amendments to the Criminal Procedure Code and the Judicial System Act adopted now effectively open the way for the funding under the National Recovery and Resilience Plan, which until now has been blocked. In the short term, one of the most important tasks for the regular government will be Schengen membership and meeting the criteria for euro adoption. Achieving real progress would be a success for the future government and would give a solid argument to GERB and Continue the Change-Democratic Bulgaria to claim that the partnership between the two formations, which caused disappointment among some of their members and supporters, was worth it. Pushing through constitutional changes related to the reform of the judiciary, however, will be more difficult because for this they will need the votes of the MRF. The movement has also advocated constitutional changes and even presented its own draft in the previous parliament, but with the MRF there is always a risk that these changes will be blocked, given the party’s influence in the courts and prosecution.

The joint governance of GERB and Continue the Change-Democratic Bulgaria also poses huge risks, mainly for the two formations of the coalition. First, the possibility that GERB cadres will enter the executive branch and try to carry over the corrupt practices of Borissov's long-standing rule into the future cabinet, and that this will become a source of constant scandals. The other sticking point could be the different views on specific legislative changes. Then there is a risk that GERB MPs will try to impose them through floating majorities with the other formations. This parliament will have to elect the members of a number of key regulators whose mandates have expired, and for some, such as the election of members of the Supreme Judicial Council from the parliamentary quota, a qualified two-thirds majority is required, which cannot be done without agreements with the other political forces.

In this aspect Continue the Change will bear the brunt of a possible failure of the government, because party figures, including co-chairman Asen Vassilev, will enter the executive. 

For GERB leader Boyko Borissov, even being in power on the margins together with Continue the Change and Democratic Bulgaria would be a huge political achievement. Being a coalition partner of Continue the Change and Democratic Bulgaria now gives him the opportunity to wash his public image. Moreover, an alliance with Continue the Change and Democratic Bulgaria and support for judicial reform gives him both international support (and, in GERB circles, they think, protection from sanctions) and guarantees that the prosecution cannot arrest him because the parliamentary majority will not give away his immunity. An alternative coalition - with MRF, TISPplus whoever else agrees - also saves him from prosecutors, but traps him into appearing to be making a coalition of those sanctioned under Magnitsky Act.

In addition, Borissov gets a chance to remove Geshev. The adopted amendments to the Criminal Procedure Code reduce the minimum number of votes in the Supreme Judicial Council necessary to remove the prosecutor general - from 17 to 13. 

In addition, the formation of a possible regular government will take away the levers of power from President Rumen Radev, who has managed to overtake all key structures in the state, while his appointees have ruled for nearly two years - starting with the security services and ending with the state administration and large state companies in key sectors. Borissov will thus be able to get a partial revenge in his war with Radev, which started during his last term as prime minister. GERB's possible participation in a regular cabinet would provide easier financial resources for the municipalities and the mayors of the party in view of the upcoming local elections in the autumn.

The controversial way in which the president handed the mandate to prime minister designate Nikolai Denkov of Continue the Change-Democratic Bulgaria looks like Rumen Radev's personal revenge against Continue the Change, but according to the weekly, it is part of his larger game of creating an alternative political centre. To keep it going, Radev has an interest in weak parties that squabble among themselves and are unable to form a majority in parliament to elect a regular government. 

24 Chasa.bg writes that five days before the deadline when prime minister-designate Nikolay Denkov was supposed to be ready with a cabinet line-up, the negotiations between Continue the Change-Democratic Bulgaria and GERB were completed and the list of ministers in a future cabinet was finaliized. This emerged from a statement by Denkov on NOVA TV on Thursday. The full list will be announced on Friday.  Among some of the known names are Assen Vassilev (finance minister), Kalin Stoyanov (interior minister), Ivanka Shalapatova (labour minister),Bogdan Bogdanov (economy minister), Emil Dechev (justice minister), Todor Tagarev (finance minister), Andrey Tsekov (regional development minister).

GERB leader Boyko Borissov said that GERB-UDF had not proposed experts in the draft cabinet, as Continue the Change want a political cabinet which will bear responsibility.

ECONOMY 

Capital writes that corruption, political instability, unpredictability and poor education - these are some of the problems that foreign investors face in Bulgaria, citing a survey by the German-Bulgarian Chamber of Industry and Commerce (AHK) among 84 small, medium and large companies that maintain trade relations with Germany or are German investors in the country. The shortage of staff is also emerging as a growing problem, which companies point to as the number one risk to their development. On some of these indicators, the country scores worst compared with the other 15 Central and Eastern European countries where the same survey was conducted. However, optimistic attitudes prevail among Bulgarian businesses, with expectations of turnover and export growth. A total of 84% of the companies in the survey rate the fight against corruption and crime in Bulgaria as unsatisfactory, with the worst score in this area compared to the other countries in the region. Bulgaria also ranks at the bottom in terms of transparency of public procurement, which is rated negatively by 3 out of 4 companies. Difficulties also stem from political instability, which creates a sense of uncertainty and unpredictability of the country's economic policy - all areas where Bulgaria scores poorly. The administrative burden and the unsatisfactory state of infrastructure, including transport, energy and information, are also highlighted as difficulties. All of these weaknesses are clear and have been highlighted by companies for years in surveys such as that of the AHK, which has been conducted almost continuously since 2005, but progress on them is almost non-existent.

However, human resources issues are also becoming more serious. In addition to academic and vocational education being poorly rated, companies are experiencing a growing shortage of staff. Two thirds of them see the shortage of skilled labour as a major risk to their development in the short term. 

Bulgaria remains attractive as an investment destination thanks to low labour costs and a lighter tax system for companies. This is probably why over 90% of the companies surveyed would invest in Bulgaria again.

However, the country's membership in the European Union stands out as one of the biggest advantages, cited by 86% of companies. The majority of them would benefit from stronger European integration, with 94% wanting Bulgaria to join Schengen and over 80% wanting the country to introduce the euro. In this context, the organisation draws attention to the trend of nearshoring (the return of outsourced production and the shortening of supply chains), which started because of the pandemic and was reinforced by the war in Ukraine. It provides new opportunities for Bulgaria to attract investment, but not enough is being done in this aspect and there is still a lot of work to be done to present and promote the country as a good investment destination.

***

Duma.bg writes that public procurement remains a fertile ground for irregularities and misuse of public resources, referring to a report on the work of the Public Financial Inspection Agency for 2022. Data from audits carried out by the agency last year show that 40% of procurement procedures and contracts for the award of activities have deficiencies. A total of 1,395 breaches of the legal framework governing budgetary, financial and economic and accounting activities were found. The deficiencies ranged in severity from technical omissions and errors to the imposition of dubious requirements in tender documentation to outright fraud. State auditors reviewed 1,008 public procurement contracts in which funds worth a total of BGN 7,069,041,023 were spent. Breaches were found in 403 of them - at a total cost of BGN 3,068,680,311, the report said. Most financial inspections were carried out in municipalities - 66%, followed by other recipients of funds from the state budget (15%). audits in companies with state and municipal participation ranked third. Inspectors revealed misuse of more than BGN 2.33 billion. However, more than BGN 1.56 billion have already been recovered.

***

With 19 votes in favour on Thursday, the parliamentary budget committee passed unanimously a new extension of the  2022 State Budget Act. The extended budget expires on June 10 and, unless a new budget extension for 2022 or a new budget for 2023 is adopted, there will be problems with a number of payments, caretaker Finance Rositza Velkova warned

As of the end of May, the deficit on the Consolidated Fiscal Programme was BGN 1.2 billion or 0.6% of the estimated GDP. The fiscal reserve is BGN 10.1 billion. The Minister said that payments of BGN 4.1 billion on projects under EU operational programmes, as well as BGN 1.3 billion under the Recovery and Resilience Plan, are forthcoming.

Under the proposed changes, money from the fiscal reserve can be spent on current needs Otherwise there will be a risk for the payment of pensions and money for hospitals if new state debt is not raised.

The continuation of all the current policies will lead to a huge budget deficit of 6.4% of GDP or BGN 11.9 billion, it became clear at the meeting. Financing the deficit could be done with new debt or revenue increases, explained Velkova.

MECHANISM FOR OVERSIGHT OF PROSECUTOR GENERAL

Provisions amending and supplementing the Criminal Procedure Code to put in place a mechanism for the investigation of the prosecutor general were gazetted on Thursday.  

Speaking on the morning programme of the Bulgarian National Television former justice minister Anton Stankov said they were controversial and rushed and run counter to the Constitution.

Stankov sees a conflict between the judiciary and legislative branches of power.

According to him, the reduction in votes needed to remove the prosecutor general from 17 to 13 runs counter to the procedure for the appointment of the top three magistrates.

Stankov also said that the Supreme Judicial Council is in competent once its term in office has expired.

The mechanism for oversight of the prosecutor general is not a judicial reeform, said Sankov. He said that the current legislature is fragmented and united only by fear.

Speaking on Nova TV, Nelly Kutskova, former chair of the Bulgarian Judges Association, said that with the new provisions successive prosecutors-general will know that they are not untouchable.