“The coalition between the Simeon II National Movement (SNM) and the Movement for Rights and Freedoms (MRF) will have a comfortable enough majority to pass legislation, but will increasingly divided over unpopular policy measures increase, “ The Economist Intelligence Unit analyses in its March 11 Country Monitor issue.

The article says that the ruling coalition displays internal tensions and predicts that tight fiscal policies and unpopular measures such as energy price rises will lead to further falls in the government’s support.

“Within the coalition MRF’s demands for more power and for measures that benefit its impoverished supporters will lead to divisions with its majority partner. The SNM will be subject to increasing internal stresses as divisions emerge among its MPs and ministers over whether to pursue market-oriented reforms or more populist measures.

According to the article, it is unlikely that Bulgaria will join the EU in the first wave of expansion in spite of encouraging comments from western European politicians.

The analysis explains that Bulgaria has closed 14 of the 29 negotiable chapters of the acquis communautaire.

“Although we doubt that Bulgaria will be able to meet the technical conditions for NATO membership by the alliance’s Prague summit in November 2002, some western countries are emphasizing the risks of a “double exclusion” (from EU and NATO) of Bulgaria and Romania, “ the analysis says.

“The fixed-line telecoms operator BTC, which analysts a few years ago thought was worth as much as USD 1 B is now expected to be sold for a much lower price. The government’s keenness to investigate past privatisation deals (500 are currently under investigation) could backfires if it deters foreign investors “ the analysis says.

The Economist Intelligence Unit forecasts that the government will slightly overshoot the budget deficit target in 2002.

Due to the fact that the euro will remain weak to the US dollar because of the weakness of economic activity in the euro-zone relative to the US, according to the authors, the lev’s trade-weighted real exchange rate should rise by less in 2002 than has been previously anticipated.

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