CEOL
Things get worse for Bulgarian government

SOFIA, Apr 11, 2000 -- (Reuters) Bulgarian Prime Minister Ivan Kostov's hopes for Western-backed reform have bogged down in indecision, according to analysts already writing off his chances of a clear-cut win in next year's election.

A crop of fresh faces brought into the cabinet in December "shot from unknown to unpopular without a pause," says Miroslava Yanova, head of local polling agency MBMD.

"The primary reason is that the people are getting poorer and poorer. They are losing faith and are not keen to sacrifice today for promises of a better future," she wrote.

With the government's popularity fading fast, experts see little chance it will risk more damage to its electoral prospects by pushing the free market reforms that Western creditors and mentors urge for one of Europe's poorest states.

"We expect that the next year's general election will increasingly become the focus of attention for policy makers, potentially harming the reforms process," Goldman Sachs said in its quarterly review of emerging markets.

"Our concern is that with rising unemployment, Mr Kostov will face increasing opposition to future painful reforms."

A senior foreign diplomat, declining to be named, was blunter, fearing even a possible return to political disorder.

Faced with the typical dilemma of a poor post-communist state trying to square democracy with structural economic change, Bulgaria's center-right leaders have lapsed into a "complete vacuum" of policymaking, he said.

MAIN REASON IS LOST TIME, RAMPANT CORRUPTION

Kostov's UDF came to power three years ago when popular protests and a financial crisis swept away the former communists of the Socialist party.

He enjoyed wide popular support for several years, halting the crisis and leading the Balkan state closer to the European Union.

But the memories faded and the pro-European drive brought no tangible improvement. Structural reforms increased unemployment and social reforms failed to get off the ground.

The middle class, potentially the strongest supporter of the center-right UDF, largely failed to emerge.

The Promyana trade union calculates that average income has fallen by half in 10 years of stop-go post-communist reform.

An average salary is barely enough to cover heating bills in winter. Industrial production is about a quarter of 1989's and the official jobless rate stands at over 18 percent.

Latest opinion polls by various agencies give the government between 25 and 34 percent approval, while well over 50 percent do not support it. Kostov's personal rating, according to MBMD, has fallen by six points from February to March alone and stands at 36 percent.

Despite pressure from international lending agencies like the International Monetary Fund, privatization is often a murky business. Many companies passing into the hands of managers who are unable to raise the investment funding the firms need.

Local media are carrying more and more reports of mismanagement by new owners, many of them seen as close to the UDF, and allegation of corruption in higher and higher places.

Last week, Kostov suspended his senior adviser, Marin Marinov, pending an investigation into his previous activities as a deputy industry minister. Marinov denies wrongdoing.

"What is not clear is whether people will wait for the next year's election or will take to the streets before that," the Sofia-based diplomat said.

"If they wait for the polls, it is clear the next government will be a coalition, with the UDF lacking the outright majority it enjoys now."



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