Bulgarian president appoints caretaker government

By bne IntelliNews March 13, 2013

bne -

Bulgarian President Rosen Plevneliev on March 12 appointed a technocratic caretaker government. Headed by diplomat Marin Raykov, the administration will face the continued anger of the population until elections set for May 12.

Plevneliev said in a statement that the caretaker government, led by Marin Raykov, Bulgaria's current ambassador to France, would take office on March 13. Including the central bank's Deputy Governor Kalin Hristov as finance minister, the temporary administration replaces the centre right government led by Boiko Borisov, which resigned in February in the midst of huge protests over austerity policies and high utility prices.

The preparation of fair elections and stability of state institutions will be the main tasks of the government, Raykov told reporters. He also vowed to stick to the 2013 budget and is committed to maintaining a currency peg to the euro. "While we follow strictly the 2013 budget framework, we will take steps to improve the incomes of pensioners and the poorest," the interim prime minister added.

Analysts say the interim government needs to urgently restore trust in state institutions or risk exacerbating an already dire economic situation in the EU's poorest country. "If protests continue and political instability drags on, it is set to pose problems for the economy by pushing new investors away and prompting those already here to postpone any development plans," Institute for Market Economics analyst Kaloyan Staykov told AFP.

Georgy Angelov of the Sofia branch of the Open Society Institute wrote in a Presa newspaper editorial, that failure to find a relatively swift way out of the political crisis "risks resulting in an economic downturn, the loss of hundreds of thousands more jobs, and growing poverty."

Borisov's government was marked by fiscal discipline, which involved keeping the lev pegged to the euro. It also squeezed the public deficit to just 0.5% of GDP in 2012 and public debt to 15-19%, one of the lowest across the 27-nation EU. But those successes came at the price of drastic government spending cuts. Public sector salaries have remained frozen at an average of €400 over the past three years, while pensions have sat at just €138.

Hence, a sharp rise in utility bills in February prompted thousands to take to the streets in the biggest upsurge of public discontent in 16 years, with demonstrators fighting running battles with riot police. Three people have died after setting themselves on fire. Borisov's decision to throw in the towel has however failed to soothe people's anger, with several thousand taking to the streets of Sofia and other cities on March 10, brandishing banners reading "Out with the Mafia," and other slogans making the populations anger and distrust of the country's politicians clear.

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