Engaged in purging the top echelons of power and making fresh appointments, the Bulgarian government has put its economic policy on the back-burner and failed to address crucial issues. Its first 100 days in office will be remembered mainly with the budget revision and the raising of the debt ceiling by 1 billion leva (500 million euro), as well as with some proposals for measures against the grey economy and relieving the VAT regime for small and medium-sized enterprises. A few controversial decisions have been taken in the energy sector, which are likely to entail more problems than benefits. The several social measures approved to support the most vulnerable groups are also likely to produce a negative effect by further widening the budget gap.
The government has also manifested enviable skills in financial management by using privatization receipts to buy shares in financially troubled ordinance plant VMZ and by transferring resources and assets from profitable companies to loss-making entities. It has failed to start the much-needed reforms in the social and healthcare sectors and has even hinted of plans to retreat on some measures, such as raising the pension age.
By neglecting the demands of protesters, who have been calling for the cabinet's resignation for 84 days now, and trying to keep its frail parliamentary majority, the government has created an unfavourable economic environment: falling consumption, lack of new investment, rising unemployment, near-zero GDP growth. Earlier this week the government easily placed a 300 million one-year bond; however, an auction for 10-year securities a month ago failed. That is a clear sign that in a long-term plan investors do not trust the government and see increasing risks in it.
Read more in Bulgarian here.