Key Challenges

Survival of government uncertain
With the rifts in the governing coalition increasing, the survival of the present coalition government is likely to become a major political challenge. If the Borissov government does not make it through 2019, it would be the fourth government in a row to fail to complete the full four-year term. Political instability is typical of Bulgaria’s party system, which is characterized by the combination of two relatively large centrist parties and a number of smaller ones, some of whom are purely clientelistic, while others are rather radical or extremist.
Instability brings wide-ranging challenges
The looming political instability represents a major challenge to 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 partially mitigated by the fact that the country has had the same prime minister and the same party leading the ruling coalition for most of the last decade. The extensive 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 sources of economic growth needed
Economically, the opportunities for Bulgaria to generate rapid economic growth through heightened capital inflows from abroad and activation of inactive or unemployed labor have come to an end. High-skilled labor has become particularly scarce, while capital inflows have slowed significantly. Realizing the potential of key economic drivers (e.g., increased skills levels, innovation capacity, productivity and policy effectiveness) remains a serious challenge.
Judicial reform a crucial building-block
Judicial reform is 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 and some choose to scale down their investment plans. Slight improvements with respect to the selection, advancement and activities of judges are counterbalanced by a deterioration in the accountability and transparency of the prosecution service.
Gaps in education access must be closed
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. Initial results (e.g., PISA, PIRLS and TIMSS scores) indicate a possibility for these reforms to eventually lead to improvements.
Demographic pressures rising
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 of political opportunism and a heavy burden on the economy. These weaknesses need to be addressed to improve financial and social sustainability.
Fourth, despite visible improvements over the last decade, infrastructure must continue to be enhanced, especially at the regional level.
Pro-reform majorities more difficult to build
Politically, Bulgaria’s most significant challenge is the fragmentation of the political party system observed over the last two parliaments. As the resurgence of nationalist and xenophobic parties has strengthened the political representation of social groups opposed to much needed reform, this makes the formation of government majorities willing and able to address Bulgaria’s key challenges more difficult and less likely.

Party Polarization

Ideology not a barrier to coalition-building
The extent to which Bulgarian parties are polarized along principles of ideology and policy rather than personality and identity is unclear. While rhetorically taking opposing views on many issues, political parties seem to be able to achieve agreement on policy whenever in power. A prime example was the 2013 – 2014 government, which was simultaneously supported by an extreme nationalist and xenophobic party, and by its rhetorical irreconcilable opponent, the Turkish minority party. After the 2017 parliamentary elections, Prime Minister Borissov managed to forge a coalition with the United Patriots, an alliance of three extreme nationalist and xenophobic parties, despite conflicting election campaign pledges. (Score: 8)
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