site.btaMedia Review: January 6

The topic of the failed negotiations for the formation of a regular government dominate Monday's news media. 

POLITICS

Capital.bg describes the negotiations on the formation of a regular cabinet between GERB-UDF, Democratic Bulgaria, BSP – United Left, and There Is Such a People as a “fog at an advanced stage”. After late on Sunday GERB announced the negotiations are terminated due to Democratic Bulgaria not supporting GERB’s candidate for prime minister, Rosen Zhelyazkov, Capital notes that it is hard to determine whether the negotiations will resume or will turn out to have been just for show in order to postpone the early elections until early spring. Things will become clear as early as Tuesday when the parliamentary Legal Affairs Committee will review draft changes to the Judicial System Act concerning the procedure for electing a prosecutor general. Stopping the procedure in which acting Prosecutor General Borislav Sarafov is the only candidate, is one of the conditions of Democratic Bulgaria for participation in the ruling majority and somewhat of a test for GERB’s attitude towards changes in the Judiciary, the analysis reads.

In an article on the same topic, 24 Chasa writes that after 21 days of negotiations, the agreement on joint governance is at a very advanced stage but is not ready. According to the daily’s information, the document reflects most of Democratic Bulgaria’s demands. An agreement was reached on the election by Parliament of the members of all regulatory bodies, including the Judicial Council in a way that guarantees the high moral qualities of the elected. Also, GERB, There Is Such a People, and the Bulgarian Socialist Party reached an agreement on quick amendments to the Judicial System Act before January 16, when the Supreme Judicial Council is scheduled to vote on the election of a new prosecutor general. It was agreed to adopt the provisions of Continue the Change – Democratic Bulgaria (CC – DB) that practically stop the election of Sarafov and make it impossible for him and Supreme Administrative Court President Georgi Cholakov to remain acting heads of these institutions. It was also agreed to adopt a regulation limiting the effects of money laundering on Bulgaria’s financial system and to elect members of the counter-corruption commission with 121, and not 161 votes, in Parliament. The draft agreement on joint governance includes a text about putting an end to politicians’ and parties’ influence on the Executive and the Judiciary, which basically meets CC – DB’s requirement for a sanitary cordon around Movement for Rights and Freedoms leader Delyan Peevski.

Duma quotes Borislav Gutsanov MP of BSP – United Left as saying about the negotiations for a regular government that there is a contact group that is conducting all the talks and will inform the BSP Executive Bureau and the BSP - United Left parliamentary group probably as early as Tuesday, after which a meeting of the National Council will be held. The collective bodies are the ones who can decide on the next steps, he explained in the south-central city of Plovdiv on Sunday during his visit at the invitation of BSP-Plovdiv together with National Assembly Chair Nataliya Kiselova. "It is important for us to have a cabinet that is composed of experts and with clear priorities so that the country can get out of this complicated situation. We do not consider it normal for the country to go to early parliamentary elections eight times in three years, but this should not happen at any cost," Gutsanov added. He underscored that the parties' priorities should first be considered before taking the next steps. "We are not talking about a coalition. This is something very different from a cabinet based on priorities. Besides, it is too early to discuss ministries. It is important for us to adopt a budget that guarantees the social tolerability of people's lives. Also, energy is a key priority for us. Look at what happened in a slightly bigger snowfall [power outages across Bulgaria over Christmas and New Year's Eve]. That is why we have raised the question again as to whether it would not be better for the State to own the electricity distribution companies. Nuclear power should also be developed in Bulgaria. These are some of the key issues for the BSP," Gutsanov explained. 

On Bulgarian National Television’s morning show, three experts commented on the failed negotiations for the formation of a regular government. According to Assoc. Prof. Tatyana Bouroudzhieva, there is no logic where one political party tells another who its candidate for prime minister should be, when they have been negotiating for weeks. "It is clear that the candidate will be from GERB. And since they have given up on [GERB leader Boyko] Borissov's candidacy, I have no idea why they are not accepting another candidate," she expressed her bewilderment. According to Prof. Svetoslav Malinov, there is much logic in choosing a non-party figure for prime minister given the parties’ positions expressed since the elections. Therefore, it was normal to lead negotiations on policies, and not on individuals, so Malinov was surprised by the reason for the negotiations getting terminated by GERB. The actions of GERB also surprised Alexander Simov, because all the other participants in the negotiations had announced their position that the candidate for prime minister should be a non-party member.  "In a situation in which you are trying to unite in one government parties that are diametrically opposed in some respects, it is clear that with a party candidate for prime minister you cannot have a working formula, no matter how you thought it on paper, it would not happen in practice," Simov argued. 

On bTV’s morning show, political experts Roumyana Kolarova, Maria Pirgova and Daniel Smilov commented on the failed negotiations. According to Kolarova, this is nothing new, because a year ago the government-formation negotiations failed again because of differences on who would head the government. In her words, an agreement could be reached if Borislav Sarafov is not elected prosecutor general against the election of Rosen Zhelyazkov as prime minister. Smilov said he is sceptical about the formation of a regular government, because for a month and a half after the elections, there were no negotiations. GERB started those two weeks before the holidays and terminated them on the first working day after the holidays; clearly, GERB are preparing for elections in April. According to Pirgova, every formation in the 51st National Assembly is fighting for survival and thus has no programme goals. "Let's see what are the interests of the parties that enter the negotiation process - none of those interests are Bulgarian industry, business, citizens, healthcare, education... This is absent from the agenda of the politicians", Pirgova said.

On Nova TV’s morning show, political experts Milen Lyubenov and Stoycho Stoychev commented on the failed negotiations for a regular government. Lyubenov said that the question of who should be prime minister is one of the first to be clarified, so he was surprised that the matter came up at the end of the negotiations. "When entering into talks to form a coalition government, the figure of the prime minister should be spoken at the outset. It seems to me that there is something else that is once again holding GERB back on the road to forming a regular government," Lyubenov believes. According to Stoychev, it is too early to wrap up the whole story and write it off, because there has been no statement from the leaders of the formations participating in the negotiations. "When something happens, we are used to Boyko Borissov announcing it.  Maybe this is some kind of tactic. Apparently, they didn't get the understanding and it is a hint: 'If you do not agree, everything goes back to square one.' It is not important what is signed and declared, but what motives drive the individual participants. I believe that the things that have leaked out as signed, have indeed been agreed upon. All parties involved in this process have an interest in making things happen," Stoychev said.   

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Trud has an interview with sociologist Petko Simeonov who analyses what happened in Bulgaria and the world in 2024. He describes the year as a missed one by the State, turned into a poorly kept façade. “Inside the country there was petty bickering. Infrastructure was not built, public works were neglected. In a large number of settlements the taps went dry. Snow fell, wind blew and we were left without electricity," Simeonov summarizes. According to him, against the backdrop of events around the world, what is happening in Bulgaria pales into insignificance. The most significant event in the world last year was the digital revolution, according to him. Simeonov is convinced that as we enter the age of the digital revolution, the change will be comparable to the Neolithic revolution 10,000 to 12,000 years ago. On the demographic problem in the country, he proposes financial support for families with three or more children. Pensions of parents of three or more children should be higher and only such people should be allowed to work for the State, he proposes.

ECONOMY

24 Chasa reports on its front page that the price of a dwelling in Bulgaria is such that one needs to set aside their entire salary for 16 years and 7 months to be able to buy 100 sq m. The dwellings in this country have appreciated so much that according to the latest data, in the third quarter of 2024 Bulgaria ranked second in the EU with an increase of 16.5% in the price of dwellings. That growth is the biggest in Bulgaria since 2008 when the world financial crisis hit. In Sofia, flats appreciated by 17.7% last year, with the average price per square metre reaching EUR 2,388, the highest in the country. The latest world rankings for affordability of dwellings show that a person has to work equally long in Bulgaria and in England to save money for a home.

In an article on the same topic, Segabg.com writes that dwellings in Bulgaria do not look so unaffordable when the data in Eastern European countries is taken into view. While Bulgarians need 199 average monthly salaries to buy a new home of 100 sq m, over 630 salaries are needed in Turkiye, 274 in Czechia, 242 in Poland, 226 in Hungary and Lithuania. That is because the price of dwellings increases but so do incomes.

Trud’s front-page article provides data on housing deals in Bulgaria showing that in the last quarter of 2024, they numbered 60,429, growing by 11.6% in the country and the most in Ivaylovgrad (Southeastern Bulgaria), by 50%. In Sofia, the deals for flats and houses went up by 32% in the October-December period, according to data of the Registry Agency. The last quarter of the year is traditionally the best for the real estate market. 

Mediapool.bg has an interview with Tanya Kosseva-Boshova, an expert in commercial property investment, who talks about the commercial property market in Bulgaria. In recent years, the commercial property market has not been soaring like the residential market in this country, the article reads. After the COVID-19 pandemic, the recovery has been slow and painful amid political instability, weak economic growth and a corresponding lack of investors. Albeit gradually, there has been a rise in transactions since 2021, according to data from the Cushman & Wakefield Forton commercial property consultancy. In 2021, EUR 176 million worth of deals were completed, EUR 270 million in 2022, EUR 190 million in 2023, and EUR 360 million in 2024. According to Kosseva-Boshova, entry in the eurozone will give an impetus to the commercial property market in Bulgaria in the coming years. She expects the extension of the underground railway system in Sofia to make more attractive the area around Tsarigradsko Chaussee Boulevard. There is interest in smaller but better office spaces with zones for relaxation and entertainment. The prices for hiring office spaces in Sofia remain stable, with top quality ones ranging between EUR 14 and 17 per sq m a month. Retail parks remain fashionable and a growing segment on the market, the expert explains.

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Telegraph has an interview with the head of the Bulgarian Association of Restaurants, Richard Alibegov, who comments on the VAT for restaurant services getting set back at the standard rate of 20% as of January 1, 2025, following a period of 9% VAT introduced during the COVID-19 pandemic in 2020. Alibegov says that despite the higher VAT, restaurants will not raise their prices because they expect the VAT rate to be lowered again soon.

On bTV’s morning show, Alibegov said he expects the 9% VAT rate to be reintroduced once the 2025 state budget gets adopted or the 2024 budget gets extended to 2025, because such assurances were given by GERB-UDF, MRF – New Beginning, Vazrazhdane, and BSP – United Left at meetings with representatives of the Bulgarian Association of Restaurants in December. The Association has been fighting for a 9% VAT rate for a long time, because in 24 European countries the VAT rate for restaurant and hotel services has been that low since 2008.

On Bulgarian National Radio, economist Stoyan Panchev from the Expert Club for Economy and Politics (EKIP) said that the focus of politicians should not be on the eurozone but on other problems, such as the state budget. In his words, it may turn out that despite the stalled negotiations for a regular government, there is an understanding at least on the state budget. The bigger problem is not political instability, but the failure to meet the eurozone criteria. The inflation criterion will again not be met, he noted. Part of the price increases since the beginning of 2025 are related to the energy crisis in the region and the VAT rate on bread getting set back at 20% from the 0% in the last four years, the economist noted and admitted that "maybe the hit will be a one-off, but it will certainly make the first months of 2025 much more difficult". It is unlikely that there will be a downward price adjustment when VAT is reduced. This topic should be closed, he stressed. The reduced VAT for restaurant services was dictated by COVID-19. "And for bread it does not make much sense - the ultimate effect on the consumer will not be much," the economist explained. "It could turn out to be a game of populism," he added.