Bulgarian finance minister Simeon Dyankov ousted.

By bne IntelliNews February 19, 2013
Bulgarian PM Boyko Borissov proposed further cabinet changes yesterday, February 18. The major surprise is the replacement of finance minister Simeon Dyankov by current EU funds minister Tomislav Donchev. The replacement of Dyankov is the most substantial change in the government so far. Delayed payments to agricultural producers who warned with strike, coming on the back of a series of protests against rising electricity bills, is considered to be the main reason to fire Dyakov. The already ex-finance minister refused to pay the agricultural subsidies in January, when they were due, because of large public debt repayments that took place during that month and drained the fiscal reserve. Instead, he proposed extending the payment deadline to March or April but this led to agri producers warning to stage a protest. PM Borissov objected Dyankov's handling of the matter. The finance ministry ordered payment of the subsidies from the fiscal reserve this week (Feb 18-22). The payment will be funded with the proceeds from an extraordinary auction for BGN 800mn on domestic market scheduled for Feb 20. Another probable reason to oust Dyankov is considered to be Bulgaria's delayed ratification of IMF's quotas increase, Capital daily reported. So far, the prime minister has not officially announced the reasons for replacing Dyankov. IntelliNews comment: Overall, it seems that the ousting of Dyankov, who was never much liked by the massive public due to his tight fiscal policy and firm stance to keep budget spending low, was a needed move for Borissov to regain popularity and support and to end the protests that are highly unwelcome ahead of the parliamentary elections in July. The appointment of Donchev as new finance minister is an easy target of criticism. In our opinion it provides concerns about exhausted human resources and inconsistency of government policy as Tomislav Donchev will have to shift from being a minister without portfolio to one of the most important figures in the cabinet. Furthermore, based on current information, he will combine EU funds management and public finances management, i.e. the two functions will be brought together again after they were specifically split by the government in 2009. Generally, we do not expect the change to have a positive effect on the cabinet's standing as it comes after a long line of replacements, which lower the trust and signal for irregularities - new education minister and new head of state energy commission (who also stayed on the post only for a few days) in the last 1 month, previously there was a constitutional court appointments scandal and defence, foreign, health ministers, and others were replaced. We also don't anticipate a positive reaction from abroad, as the ousting of Dyankov may raise Bulgaria's sovereign risk premium and lower the trust of international investors. Furthermore, the announcement for an extraordinary debt issue this week sends negative signals to the market about government's ability to plan liquidity needs. Generally, we do not foresee any notable change in the course of economic policies of the government although the new finance minister may implement a more relaxed fiscal policy, especially this year, ahead of elections. The ballot will determine the way forward and Borissov who was till recently the irrefutable leader and most popular political figure, will have to quickly find a way to convince the public that the new finance minister and the government as a whole have the capacity to restore economic growth and tackle rising unemployment and increasing social unrest.

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