Political objections halt nomination of Bulgaria’s new central bank deputy chief

Written by on February 13, 2015 in Bulgaria - Comments Off on Political objections halt nomination of Bulgaria’s new central bank deputy chief

Bulgarian National Bank governor Ivan Iskrov’s nomination of Dimitar Kostov to be his deputy chief of the central bank has been halted by a political row, with the ruling party withdrawing its support after other parties objected to the nomination.

Prime Minister Boiko Borissov ordered the parliamentary group of his centre-right GERB party not to support Kostov after coalition cabinet minority partner the Reformist Bloc made it clear they opposed the nomination.

It had been anticipated that there could be complaints about the nomination of Kostov, given that he was finance minister in the socialist government of prime minister Zhan Videnov between January 1995 and February 1997, at the time when Bulgaria went through a banking crisis that saw several lenders collapse, triggering hyper-inflation and the introduction of the currency board in 1997 (after he left office).

Borissov made his irritation with the Reformist Bloc and other parties clear, accusing them of inappropriate behaviour and populism.

“I want to make it clear that I am getting tired of the populism that is continuously being done at GERB’s expense.

“MPs from all political parties – the Reformist Bloc, the Patriotic Front, the Movement for Rights and Freedoms, and from the Bulgarian Socialist Party, know that Iskrov is the only person, who can nominate a BNB deputy governor, in terms of the current law.”

Borissov said that no one could make Iskrov propose anyone.

“Over the past half a year, and even more, BNB has been working without a deputy governor responsible for the most important field of the bank’s work – bank supervision.”

Borissov said that now that the nomination of Kostov was not approved, no one would be able to make Iskrov propose someone else, while in turn Iskrov obviously did not want to resign as BNB governor either.

“He wants to stay there until the very last day of his term, and we have no legal right to force him do anything. Everyone knows that very well,” Borissov said.

“That is why the recent populism that accused us of backing Mr Kostov, who used to be part of the governance during Bulgaria’s biggest crisis in the 1990s, will not be tolerated any longer.

“The only bad thing that will result from this is that Bulgaria will not have a BNB deputy governor for bank supervision until September this year, when a new governor will be selected,” Borissov said.

Earlier, Menda Stoyanova of GERB, who heads Parliament’s committee on the budget and finance, said that Parliament would neither consider nor vote on Kostov’s nomination because there was no consensus about it.

Stoyanova said that the nomination was opposed by the Reformist Bloc and by the Bulgarian Socialist Party.

Iskrov – who himself has been the target of attacks from most political parties in Parliament over his handling of the CCB affair – nominated Kostov on January 29, with BNB saying at the time that Kostov was“is well-known and respected” both in Bulgaria’s banking sector and international financial institutions.

Kostov is currently serving his second six-year term as deputy governor in charge of the banking department, a position he has held since 2005.

The position of deputy governor in charge of bank supervision became vacant in January when Parliament voted to dismiss Tsvetan Gounev on the grounds that he has been unable to carry out his duties for more than six months.

Gounev is under investigation for allegedly failing to exercise proper oversight of Corporate Commercial Bank (CCB), the country’s fourth-largest lender until June 2014, when it was put under BNB administration, with the central bank later repealing its banking licence (for full coverage of the CCB affair, see The Sofia Globe reporting here.)

Whoever is appointed by Parliament as the new BNB deputy governor would serve the rest of Gounev’s six-year term, which expires in June 2019.

(Photo: Clive Leviev-Sawyer)

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