‘Extended’ reform plan – Bulgarian government’s mystery tour presses on

Written by on July 23, 2013 in Perspectives - No comments

The Bulgarian Socialist Party government, after approving a Budget revision that will mean a billion leva new debt – a move that has found no defenders among serious economists and that has deepened the political crisis – now has leaked its “extended reform plan”.

The trouble is that the reform plan may be longer, but is still as short on detail. Bulgaria increasingly resembles a vehicle on a mystery tour, with a driver lacking a map and with ears plugged against the noise on the road.

The “extended reform plan” leaked to Bulgarian daily Standart recites the now-familiar pledges about preventing electricity price increases, curbing medicine price increases, expanding energy assistance, increasing child support, expansion of job creation, resumption of dialogue with “social partners” – all without saying precisely how these would be achieved.

Businesses are promised, among other things, an “immediate stop of the racketeering type of pressure from central authorities on businesses and ‘calming’ the business community to gain investor confidence. Also pledged are investigations into the awarding of public contracts, repayment of accumulated state debt to businesses within three months, rejection of the use of revenue agencies for “power pressure” on taxpayers and, elsewhere on the list, energy reforms such as predictability of prices and “restoring conditions” for electricity exports and better capacity utilization.

Promises in regard to the state include “comprehensive analysis and complete revision of government activities in all spheres and taking legal measures to punish violations”, a new model of interaction between government and parliament, ending indiscriminate use of spying methods, and various other steps, including “creation of guarantees of a free press and media” (among the oddest pledges, given that there is a specific provision guaranteeing such in the constitution) and fair elections by amending electoral laws and “actions to reinforce citizen participation in the electoral process”.

Further, the Bulgarian Socialist Party government, in which former finance minister Plamen Oresharski is placed in the prime minister’s chair, plans to introduce family income tax in 2015, although it is unclear how this will work. The proposal is first to be put to the party for approval and the “social and fiscal effects” of the proposal will be analysed.

Other aspects of the long-term plan remain familiar from the pre-election campaign – the creation of 250 000 new jobs (details how still not known), a freeze on the pension age (details not yet clear), suspension of suspicious procurement procedures (criteria not yet announced), and reduction in state fees for start-up businesses (details not yet known).

Also planned is a move to prevent banks “arbitrarily” changing the costs of loans and removing the right in law for banks, mobile operators and district heating companies to enforce debts through a fast-track court order. Also envisaged is the closure of 136 state and national agencies, with their responsibilities dispersed among existing ministries, a move about which, yes, details remain unclear, however striking the figure that there even are 136 state and national agencies.

Meanwhile, political attacks on the Budget revision are continuing, on the eve of the planned first-reading debate in Parliament on July 24.

At a July 23 news conference, the leader of the extra-parliamentary right-wing party Democrats for a Strong Bulgaria, Radan Kanev, said that for at least half of the billion leva loan that the government intends to take, there was no justification, and these funds would be spent on the “energy mafia”.

Kanev pointed to a number of what he called “lies” about the purpose of the loan, giving as an example the argument for providing a buffer in the budget to cover withdrawals at the beginning of the year for loan repayment of farm subsidies as funds have already been recovered from the EU budget.

He said that he was inclined to agree only with the possible need for financial resources for new parliamentary elections, as demanded in anti-government protests which entered their 40th consecutive day on July 23.

Radev said that the only claim by the government that “sounded fairly normal” was that the money would be allocated to the fiscal reserve, but given that the reserve was at a good level, there was no actual need to do so, according to the DSB leader.

He said that more than two-thirds of the 500 million leva half of the loan would go to coal and heating plants linked to wealthy business person Hristo Kovachki and a number of inefficient plants held by oligarchs close to the government.

Bozhidar Lukarski, leader of the extra-parliamentary centre-right Union of Democratic Forces, said that the Budget revision was a recognition of the probability of early elections. He predicted that early parliamentary elections would be held simultaneously with Bulgaria’s European Parliament elections in May 2014.

Among other criticisms of the Budget revision, Lukarski said there was no explanation why money was provided in the update for a financial injection for the Bulgarian Energy Holding structure, which was virtually bankrupt and was the subject of a recommendation by the EU that it should be closed down. The question remained why the government wanted to revive it, Lukarski said.

Meanwhile, Bulgaria’s centre-right former ruling party GERB, which has been boycotting Parliament, said that it would return to Parliament to vote on the Budget update. Party leader and former prime minister Boiko Borissov said that the decision by the cabinet on July 22 to ask Parliament to approve the loan would lead to an excessive deficit, penalties from the European Commission “and in the end, the Greek scenario”.

(Photo of Oresharski: government.bg)

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About the Author

Clive Leviev-Sawyer is the Publisher and Editor-in-Chief of The Sofia Globe. He is the author of the book Bulgaria: Politics and Protests in the 21st Century (Riva Publishers, 2015).