Bulgaria’s party system over the last decade has been dominated by two parties of the center-left and center-right, with various configurations of smaller parties representing an increasingly fragmented political space around them. Government majorities have been secured through the formation of coalitions. However, these coalitions have tended to be unstable, leading to three consecutive early elections in 2013, 2014 and 2017.
Stable center inside shifting governments
The potential for political instability represents a major challenge facing the country, since instability inevitably affects both the government’s ability to adopt a long-term perspective and the economy’s ability to sustain economic growth. The negative effects of the fluidity of the party system and the frequent changes in government have been partly mitigated by the fact that the country has had the same prime minister and the same party leading the ruling coalitions for most of the last decade. Increased governance experience of the prime minister and main government party may lead to improvements in the capacity of the government to develop strategies, and coordinate and assess policies.
New internal growth drivers needed
In the past, Bulgaria managed to generate rapid economic growth primarily by attracting foreign capital and adding previously unoccupied low-skilled labor to the workforce. Today, these mechanisms for generating economic growth are no longer available and Bulgaria needs to strengthen its internal growth drivers. While economic growth over the 2015 – 2017 period has been relatively strong, and economic activity and employment have reached record levels since the beginning of the current transition, the potential of key economic drivers – such as raising skills levels, innovation capacity, productivity and policy effectiveness – remains a serious challenge.
Judicial reform a crucial building-block
Judicial reform will be key to Bulgaria’s ability to meet these challenges, particularly reform of the prosecution service. Presently, there are illicit mechanisms within an unaccountable judiciary that allow individuals to acquire privilege, and political and economic influence. These mechanisms contribute to the capture of the prosecution service by special interests with a political agenda. Consequently, legitimate businesses and entrepreneurs do not compete on a level playing field. While the new Supreme Judicial Council, in office since September 2017, has been evaluated as containing many more reputable and professional people than before, the council still selected a representative of the old status quo as chair of the Supreme Administrative Court, despite needing to establish and protect judicial independence and professionalism through its rules and appointments.
Education, health, pension reforms vital
A second important reform area is education. The exclusion of various – especially minority – groups from adequate education and labor-market participation, and low basic literacy rates need to be addressed. The promotion of a skilled and flexible labor force remains a major challenge. The Ministry of Education has presented reform proposals that point in a desirable direction, but they need to be implemented and supplemented by further reforms.
A third challenging area is the health care and pension systems. Negative demographic trends impose a substantial financial and political challenge on both social systems, making them financially unsustainable, easy victims for political opportunism and a heavy burden on the economy. These weaknesses need to be addressed to improve their financial and social sustainability.
Fourth, despite visible improvements over the last decade, infrastructure must continue to be enhanced, especially at the regional level.
Politically, Bulgaria’s most significant challenge is the fragmentation of the political party system observed over the last two parliaments. In particular, the resurgence of nationalist and xenophobic parties increases the likelihood that parties and social groups opposing reform will prevent the formation of government majorities willing and able to address Bulgaria’s key challenges.