Key Challenges

Electoral results may
lead to compromises
The survival of the ruling coalition, whose term ends in early 2021, looks doubtful. However, the relatively poor showing of some of its members in the local elections in October and November 2019 may incentivize them to make the compromises necessary to prevent early elections. Maintaining parliamentary support through 2020 will be a challenge. In any case, the months to come will be characterized by heavy electioneering.
Pre-election budgets usually boost spending
Thus far, the changes in the stability of the political configuration have not had a detrimental effect on government economic policies or the economy’s ability to sustain economic growth. Continuing this dynamic through 2020 will be another challenge, especially as the 2021 budget (to be announced in late October 2020) is likely to be a pre-election budget, which usually means high deficits, large increases in politically rather than economically justified spending, and a rise in public debt. Another very serious potential challenge would emerge if the global economy enters a downturn during 2020, with consequently negative effects on capital and trade flows, to which the Bulgarian economy is highly sensitive.
Rapid growth opportunities dwindling
Economically, the opportunities for Bulgaria to generate rapid economic growth through heightened capital inflows from abroad and the activation of inactive or unemployed labor have largely come to an end. This was reflected in somewhat slower growth rates in 2019, and expectations of further declines in 2020. Realizing the potential of key economic drivers (e.g., increases in skill levels, labor-force activation rates, innovation capacity, productivity and policy effectiveness) remains a serious challenge.
Judicial reform a key
factor in improvement
Judicial reform, and particularly reform of the prosecution service, is a key factor affecting Bulgaria’s ability to meet these challenges. Following a nontransparent and noncompetitive procedure, a new prosecutor general with a controversial record was appointed in late 2019, and was slated to take office at the beginning of 2020. A key question for the year will be how he begins to carry out his mandate. Due to the resignation of the director of the anti-corruption agency in 2019, a new director will have to be appointed; the quality of the procedure and of the person selected will be another key test for 2020.
Serious challenges in
many sectors
Serious challenges remain in many major policy areas, including the education, healthcare and pension systems. Negative demographic trends are imposing a substantial financial and political burden in each of these areas. Their problems are easy rhetorical targets for political opportunists, but no actual reforms have been proposed, and comprehensive reform remains a major challenge.
Despite visible improvements over the last decade, infrastructure must continue to be enhanced, especially at the regional level, and especially with respect to the protection of the environment and natural resources.
Fragmentation complicating
Politically, Bulgaria’s most significant challenge is the fragmentation of the political party system that has been observed over the last two parliaments. The two elections in 2019 – EU parliamentary and local – tentatively indicated that the resurgence of nationalist and xenophobic parties may have crested. Nevertheless, it seems certain that future Bulgarian parliaments will continue to be fragmented, making the establishment of well-supported reform-capable majorities a challenge.

Party Polarization

Rhetoric more polarized than practice
The extent to which Bulgarian parties are polarized along principles of ideology and policy rather than personality and identity is unclear. Rhetorically, the level of polarization seems high, but in terms of policies proposed and actually followed when in power, differences seem much less drastic. After the 2017 parliamentary elections, Prime Minister Boyko Borissov managed to forge a coalition with the United Patriots, an alliance of three extreme-nationalist and xenophobic parties, despite conflicting election campaign pledges. While in power, the nationalist parties continued with their strong rhetoric, but have not changed the relatively moderate policies followed by all governments in Bulgaria for more than 20 years.
Consensus possible,
but difficult
Cross-party consensus on policy and legislative matters is possible, even between ruling and opposition parties, but is limited by the parties’ positioning with regard to voter perceptions. In the present parliament, the opinions and proposals of one of the opposition parties, the Movement for Rights and Freedoms, have on several occasions been taken into account and even adopted, a prominent example being the final version of the changes to the party-financing regulations. This has taken place much less frequently with the bigger opposition party, the Bulgarian Socialist Party. In this case, both sides have sought consensus much more rarely; there has been some consensual voting on appointments, for instance on Supreme Judicial Council candidates, but almost never on important policy or regulatory issues. (Score: 8)
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