Bulgaria’s MPs voted to appoint Dimitar Radev as the new central bank governor on July 14, followed by a vote to accept incumbent Ivan Iskrov’s resignation from the job three months before his term expired.
Radev took the oath of office in Parliament on July 14, but will take office on July 15, in a formal “passing-the-reins” ceremony at the Bulgarian National Bank (BNB). Even though he takes office with three months left on Iskrov’s term, recent legislative changes mean that Radev will not have to finish his predecessor’s term and will begin a full six-year term in office.
Radev was the first of four nominees put forth for the position and was considered the favourite from the start, given that he was endorsed by GERB, the majority partner in Bulgaria’s four-way ruling coalition. His nomination received 130 votes in favour, including 23 votes from opposition MPs, which ensured that he got the necessary majority in the 240-seat legislature; 16 MPs voted against and 34 abstained.
His appointment may not be final, however, as the Constitutional Court decided last week to take on a case brought forth by 74 MPs, who argued that the central bank governor election rules breached constitutional norms in limiting only parliamentary groups (as opposed to any individual MP) to make nominations.
The court has no fixed timetable dealing with the cases, but given its track record, a ruling was not expected until the end of the year at the earliest.
Radev said that one of the first tasks he would undertake in his first day in office would be to “inspect the existing organisation to observe and react to the situation in Greece”. His predecessor Iskrov and senior politicians have repeatedly said that Bulgarian subsidiaries of Greek banks were not exposed to any risks stemming from the ongoing crisis in Greece and would not suffer in case of a Greek default because they held no debt issued by Athens.
During the hearings that preceded the vote, Radev declined to name his nominees for the three key deputy governor positions. By law, the BNB board is made of seven members – the governor, three deputies nominated by the governor and appointed by Parliament, as well as three members appointed by the country’s President.
Speaking to reporters in Parliament after taking the oath, Radev named the nominees, which are expected to be formally put forth for consideration by MPs. He said that he would nominate incumbent Kalin Hristov, whose term in charge of the issue department (which runs Bulgaria’s currency board and the lev’s peg to the euro) expires in several months, for a new term.
Radev would also nominate Nina Stoyanova as deputy governor in charge of banking (generally seen as the least important of the three deputy positions), but his last nomination could prove the most controversial, as he was set to follow in Iskrov’s footsteps by nominating Dimitar Kostov, now deputy governor of the banking department, as deputy governor in charge of bank supervision.
Kostov was formally nominated by Iskrov in January, after Parliament sacked Tsvetan Gounev on the grounds that he has been unable to carry out his duties for more than six month. Gounev took a leave of absence last year shortly before the Corporate Commercial Bank (CCB) was put into administration and is one of several people facing charges of mismanagement for the bank’s collapse.
The nomination was never put to a vote, partially because some parliamentary parties questioned Iskrov’s “moral right” to make nominations, given his own share of blame how the central bank handled the CCB collapse, but also because Kostov was the finance minister in the socialist government of prime minister Zhan Videnov between January 1995 and February 1997, at a 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 Videnov’s cabinet was ousted by street protests.
Radev, who has worked for the International Monetary Fund since 2001, was one of Kostov’s deputy ministers in that cabinet and later stayed on after the fall of the Videnov government and held the same position in the centre-right cabinet that implemented banking reforms in the aftermath of the crisis.
The position of deputy governor in charge of bank supervision has been vacant for more than six months, with Neli Kordovska serving on an interim basis – despite allegations, later confirmed by Parliament’s budget committee chief Menda Stoyanova, that Kordovska withdrew two deposits in CCB (worth more than the amount guaranteed by law, 196 000 leva) from the bank just hours before the lender asked to be put under the central bank’s administration.
(Screenshot of Dimitar Radev from Bulgarian Parliament live streaming feed.)