06 March 2013

Reuters: President says Bulgaria will stick to spending controls

Bulgaria's president tried to reassure Sofia's European Union partners that any new government in his country would not ease controls on spending to appease a tide of public anger that brought down the last administration.

Early elections in May will almost certainly result in a parliament split between factions unwilling to work together, raising questions over whether it can maintain tight fiscal policy needed to maintain a currency peg to the euro. Those concerns are particularly acute given that the economy grew by only 0.8 per cent in 2012.

President Rosen Plevneliev occupies what is normally only a figurehead position, but takes on a particular significance as it is he who will choose an interim government on March 13 to take the country to the elections and he will also have influence over the formation of a new coalition after the polls. "Bulgaria is an island of fiscal discipline", Plevneliev told reporters on a visit to Brussels. "The budget is clear, it is not going to be changed. But with the budget there is a smart option to do more social policies."

Bulgaria's economy is only slowly recovering from a deep recession after a credit boom burst in 2009 and that, combined with protester demands for more spending, is likely to mean the budget deficit rises from just 0.5 per cent of national output last year. The government targets 1.3 per cent for 2013. "What we will be seeing in the next 1-2 years in Bulgaria is not any break of fiscal discipline", Plevneliev said. "But on the other side a switch to more productive policies in favour of employment and social care."

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