The week: Are parties going to agree on anything, the Azeri gas gambit and BNB cools down crediting

Where to?

The week: Are parties going to agree on anything, the Azeri gas gambit and BNB cools down crediting

Coalition with GERB? Don’t look at what he says, look at what they do

Where to?

© Capital weekly

Welcome, dear readers, to our little fireside chat about what's been happening in Sofia and around. It's on me to guide you through this eventful week, as my colleague Ognyan is a guest at the Leipzig book fair.

So let's start with the big one: Is there finally going to be a government? This nagging question is the one on almost everyone's lips this week, with all eyes on negotiations between the leaders of the two biggest factions - GERB and WCC-DB, in parliament.

There are many valid reasons to ponder on that - the country has been in a deepening political deadlock for the past two years, it has been ruled by an unelected caretaker cabinet that wields far more power that it is meant to, the state budget has exploded with a recently unimaginable 6.3% deficit, and radical parties are on the rise at a time of international crisis...

Read below for our (and obvious from their reactions - WCC and DB and everyone else's) surprise when Boyko Borissov decided to fold a winning hand and sit down to talk. It's so out of character that it makes you wonder what exactly is going on behind the scenes or in his head. It certainly was a sight to behold when both BSP and MRF, who were already lining-up for power, were left standing by the door.

But for those who wonder if the new (and unexpected) outbreak of maturity from Borissov will bring "normalization" to Bulgarian democracy, I urge them to slow down. He is, as Americans once called him, "street-smart". And we're very much afraid his opponents are not. He also has a path to power and they don't.

But even if we believe honestly that he's a changed man, this will be decided not in the dusty parliamentary rooms, but in the upcoming autumn local elections.

If we talk about any normalization, the process ought to start there, and events on local soil smell and feel like last-minute firesales. Here are three examples from the country's three largest cities from the past week alone:

  • The announced rearrangement of the landmark "yellow cobblestones" in the capital less than a year after a multimillion, three-month-long refurbishment last summer. The term "repair of the repair" has become a poster phrase for Sofia mayor Yordanka Fandakova's botched renovation works that have had to be redone again and again - usually at taxpayers' expense, due to poor oversight and problematic procurements, always won by the "right" firms. This time around, even the EU prosecution office got involved with this particular case, but it is only one of many manifestations of the corruption-ridden governance of the capital under GERB.
  • In Plovdiv this week the GERB-led municipality gave up in fighting for the Plovdiv Fair, a 360 acre, prime location, internationally renowned exhibition complex. So the local oligarch Georgi Gergov managed to acquire 80% of it. It's true that Plovdiv gave up already a long time ago, but the final rush of Gergov to consolidate was helped first by Varna giving him its stock, then by Plovdiv not appealing that. Asked why the authorities did not even try to block the deal in court, the deputy mayor of the city Velichko Rodopski just told local media there was "no point" in wasting money.
  • And last, but not least - Varna, the forgotten city. Another iconic modernist building - the public bathouse, known as the "Mushroom" for its peculiar domed design - bit the dust after decades of neglect and a number of very questionable decisions by the GERB-led municipal authorities.

Those are just a drop in the ocean: cases like these, repeated on a similar or smaller scale, again and again, happen in all Bulgarian municipalities. Borissov always claims he's unaware of those machinations. Yet it's very convenient for him to keep them at a hand's distance and act as an arbiter when he controls the lot. Once things start to change, this will be where the first cracks will appear. So to guess what is really going on, look out for those, wherever you live.

1. Politics this week:

Cabinet in sight? Not yet, but maybe we will get a budget

If you read our politics update from Wednesday, you'd know that GERB and WCC-DB unprecedentedly met in Parliament, exchanging niceties (especially Mr Borissov, who even said that he and WCC's Kiril Petkov have "forgiven each other" for the March 2022 arrest of the GERB leader) and agreeing to start some form of discussion for a cabinet or, at least, a short-term legislative program.

Well, there was a second meeting on Thursday afternoon, where the two factions talked budget, agreeing not to cut down social spending or increase taxes, but to find some form of "technical solution" (according to WCC's Assen Vassilev) that would bring down the planned deficit from a staggering 6.4% of GDP, as in the draft of the Donev caretaker cabinet, to under 3%, so that Bulgaria continues complying with the Maastricht criteria to join the euro.

In short - no breakthrough yet, but don't discount completely the possibility for some joint actions on behalf of the two big factions in the National Assembly.

The three pillars of Bulgarian referendums: The lev, The gender and The president

The drive towards direct democracy among Bulgarian populist parties has been growing. Two weeks ago, Vazrazhdane successfully filed almost 600,000 signatures for a plebiscite that - if passed - would practically cement the Bulgarian lev until the mid 2040s. A date is not yet set for the referendum, but it could easily coincide with the likely next early vote for parliament.

This week, two other referendums hit the news. First, TISP and Slavi Trifonov's bid for a presidential republic got turned down because it did not reach the 200,000 signatures threshold required by law to enter parliament.

Then, BSP officially announced on Wednesday it will attempt to collect signatures for a plebiscite on "gender ideology." The question that the Socialists would attempt to ask is as follows: "Do you support the introduction of a ban on gender reassignment training, education and propaganda and concepts of gender other than male and female among children and students in Bulgaria's education system?"

Peace-loving Russophiles on the watch

How does one best protest against war? If you are a Bulgarian Russophile, you do it with traditional folk music, waving Russian flags alongside the Bulgarian one and playing the anthem. This is what happened at last Sunday's "Protest for peace and neutrality" in Sofia and several other large cities which attracted thousands of people. The march was endorsed by several minor leftist parties, Vazrazhdane, and a movement with the very explicit name "Out of NATO and the EU" which failed to gain traction at the recent elections.

Mitrofanova's favorite politician

In a rare interview, the Russian ambassador spoke to controversial journalist Martin Karbowski and said that, if she were a Bulgarian national, she would definitely vote for Kostadin Kostadinov and his Vazrazhdane party. This (not very surprising) choice - and the fact that a foreign diplomat expressed a clear political preference - caused a commotion on social media and even led to a strongly-worded position from the Foreign Ministry a few days later.

2. Economy:

BNB tries to cools down the credit boom

In a bid to cool lending, the Bulgarian National Bank (BNB) resorted on Wednesday to its strongest monetary policy instrument for the first time in over 15 years - raising the percentage of the minimum reserve requirement (MRR) that banks have to maintain. The decision raises the rate from 10% to 12%, which means that for every 100 levs attracted, banks will have to keep nearly 12 deposited with the BNB. The change comes into force on 1 July, and even before that, on 1 June the rate of the MRR for funds raised from foreigners rises from 5 to 10%, and a month later the rate for them will also become 12%, which, however, has a smaller effect, as Bulgarian banks are mostly financed from the local market. By design, this move should have a constraining effect on lending activity, as it reduces the resources available for new lending.



The caretaker cabinet proposed a record-high deficit in Bulgaria's 2023 budget and a need for new debt of 13.7 billion levs. This happened because the parliamentary parties did not support the caretaker cabinet's ideas for changes in the tax legislation that would have allowed levying a tax on excess profit and eliminating the differentiated VAT treatment of some sectors.

55,000 leva

The amount that the State Directorate for Construction Control (DNSK) fined five construction companies, including the state-owned Avtomagistrali firm, for illegally constructing two sections of the Hemus highway, for which they received BGN 212 million in advance payments.


The decline in building and land purchases in the first quarter of 2023 according to the National Register Agency compared to the same period last year.

3. Business:

Venture capital


A new EuVECA AIFM (alternative investment fund manager) was launched this week. It specializes in early-stage VC. Its current fund goes by AlfaStar Capital EuVECA and is an open-ended private venture capital fund.


Unicredit Bulbank

The new-old leader in the K10 ranking of the banking sector in Bulgaria, compiled by Capital weekly. Expect the summary of the ranking next week.



The Shumen-based aluminum plant is preparing a BGN 300 million investment that will enable it to produce products for all industries, including aviation.



The sales of the country's third largest supermarket chain recorded a jump of 24.2% in 2022, reaching BGN 1.237 billion according to company CEO Vigintas Shapokas, who held a press conference earlier this week.

4. Energy:

Azerbaijani breakthrough into the Bulgarian gas market

President Rumen Radev made the surprising announcement earlier this week that the Azeri national energy company SOCAR will enter the Bulgarian gas market. The agreement was verified with the opening of an office of the company in Sofia. Moreover, the announcement was made at a multinational conference which took place in Sofia and proclaimed the new gas EU deal called Solidarity Ring.

The initiative is for the member-states in Eastern Europe such as Romania, Slovakia, Hungary and Bulgaria and focuses on bringing up more Azeri gas to replace the Russian. Significantly, Turkish representatives appeared at the conference even though Turkey is not part of the initiative. However, Ankara has the last call on the flows of Azeri gas since all of the quantities have to pass through their gas transmission network.

Having SOCAR as a gas trader also means more competition for the national distributor Bulgargaz which has almost full monopoly on the market. Already Bulgaria imports 1 billion cubic meters of gas from Azerbaijan from a deal between Bulgargaz and AGSC. Interestingly, Bulgargaz could be left out of the equation in the local market since the Azeris are becoming a local player.

5. Watch out for:



Romania announced it has launched a high-speed railway project that will connect its airport Henri Coanda - Otopeni with the capital's center, the Southern city of Giurgiu and, across the Danube River, with Bulgaria's Ruse. It is expected that the average speed of the trains traveling along the line would be 160 km/h, which would significantly shorten the trip between the largest city in Northern Central Bulgaria and its nearest airport to about an hour.


The Regional Environmental Protection Inspectorate of Veliko Tarnovo blocked the construction of a massive RDF-burning plant in the town of Pavlikeni in Central Bulgaria over health and environmental protection concerns. We wrote about it last year.



The day that Bulgaria's first newly constructed stadium in the last few decades - the Botev Plovdiv stadium - will officially open to the public with a game between the home team and Levski - Sofia.



Saudi company TAWAL purchased the communication towers of United Group in Bulgaria, Croatia and Slovenia, entering the EU market. Find out more about the deal here.

Welcome, dear readers, to our little fireside chat about what's been happening in Sofia and around. It's on me to guide you through this eventful week, as my colleague Ognyan is a guest at the Leipzig book fair.

So let's start with the big one: Is there finally going to be a government? This nagging question is the one on almost everyone's lips this week, with all eyes on negotiations between the leaders of the two biggest factions - GERB and WCC-DB, in parliament.

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