Elisaveta Konstantinova
Reuters
Bulgaria`s economic prospects remained optimistic after a group led by ex-monarch Simeon II swept to victory in a parliamentary election three days ago, analysts said on Wednesday. But possible delays in forming a government might switch the focus from economic priorities to political horse-trading and slow down the pace of reform, they said. `The parliamentary election held on June 17 appear to have secured another four years of economic reform for Bulgaria, to build upon the successes of the last four years,` said ING-Barings economist Charles Robertson in a report on Bulgaria. Even if reforms were to slow down, there is no chance of them being reversed, he said. A two-month-old National Movement for Simeon II won the election, just one seat short of outright majority in parliament. Forming a parliamentary coalition and then a government is the group`s top priority now. The outgoing Union of Democratic Forces (UDF) and the ethnic Turk Movement for Rights and Freedoms are seen as natural allies for the new group, sharing similar goals on reform and European Union membership. ING-Barings` optimistic scenario involves a coalition of the three political forces. But a coalition without the UDF is seen as less stable. `This would be concerning because the movement and MRF do not have much experience of government. They may take time to find their feet and may find it surprisingly difficult to implement reform,` said Robertson. The centre-right UDF has yet to recover from the defeat which ended its four-year term in office. It lost 50 percent of it voter support following painful reforms and corruption allegations, which its officials denied. Simeon pledged swift reforms and higher living standards in 800 days. His programme focuses on zero tax on re-invested profit, zero capital gains tax and a balanced budget. Bringing in foreign investors to speed up sell-offs of the state telecoms company, the tobacco monopoly Bulgartabac, the Varna shipyard and restructuring the National Electricity Company and remaining two big state banks, are other objectives. Some economists see Simeon`s ambitious programme as too populist and impossible to fulfil.But Robertson is upbeat. `These policies are broadly realistic. The authorities can afford to cut taxes and increase spending if GDP rises by seven percent a year, which we think is achievable,` he said. Bulgaria`s economy grew 5.8 percent last year and the UDF government mapped a further five percent growth for this year. Pledged funding from the EU and the European Investment Bank could help keep growth high, said the report. `The initial programme lacks details as regards achieving a balanced budget while reducing taxes and increasing spending,` Deutsche Bank strategist Peter Botoucharov told Reuters. A Deutsche Bank report on Bulgaria saw reforms slowing down in the next few months, but still gave a positive outlook. `Macroeconomic stability and strong debt payment capacity are the main factors supporting Brady performance,` said the report. Bulgaria`s annual $1.3 billion dollar foreign debt payments are ensured by ample reserves of over $3 billion.
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