Bulgaria's
parliament moved to cut electricity prices on Wednesday, an attempt to
defuse public anger that forced the government out which risked
undermining attempts to keep the economy on an even keel.
Adding to a sense of political
limbo the European Union's poorest state, outgoing Prime Minister Boiko
Borisov has been hospitalized with high blood pressure, before an
interim government is appointed to take the country to early elections.
After
demonstrators angry at high electricity prices attacked power company
offices and three people set themselves on fire, parliament passed a law
that will allow electricity prices to be cut by eight percent from
March.
That will further hurt
electricity distributors - Czech companies CEZ and Energo-Pro and
Austria's EVN - which are already the focus of protesters' ire.
"The
situation is tragic. We need a radical a change - people took to the
streets due to total misery," said Sergei Stanishev, leader of the
opposition Socialists (BSP).
Borisov
- a former bodyguard to communist dictator Todor Zhivkov - resigned
last week after two weeks of sometimes violent protests by tens of
thousands accusing the government of being a "Mafia" due to rampant
corruption and its failure to improve living standards.
Austerity
has been relatively mild compared with some European countries -
salaries and pensions were frozen rather than cut - but many people are
angry that after joining the EU in 2007, Bulgaria seems to have made
little progress.
Borisov's
departure has failed to fully calm voters in a country where the average
monthly wage is 400 euros ($520) and pensions less than half that.
Demonstrations have continued on a smaller scale though large protests
are planned for the weekend.
Other
parties have declined to try to form a new government, meaning Borisov
remains in office until an interim government is appointed, probably
next week, which will take Bulgaria to elections expected in May.
Hospital
officials said Borisov was admitted with hypertension earlier this
week, but should be discharged later in the day. A cabinet meeting due
on Wednesday was postponed due the prime minister's absence.
Borisov's
GERB party is now running neck-and-neck with the BSP and neither is
expected to win a majority. Whichever coalition forms a government, it
will be under significant pressure to spend more.
LOW LIVING STANDARDS
Borisov
has maintained tight fiscal discipline and brought the budget gap down
to 0.5 percent of gross domestic product, important to maintain a
currency peg to the euro.
But
living standards remain less than half the EU average and public anger
spilled over when bills for electricity, which many people use for
heating, suddenly rose in cold weather.
Parliament
changed the law to allow regulators to change prices more often than
the current once a year, in a move that would allow a cut promised by
Borisov a day before he resigned.
The
government's concessions mean the next administration will be under
pressure to further loosen the purse strings - risky for Bulgaria as it
needs to keep its debt and deficits low to maintain confidence in its
currency peg to the euro.
Cutting
electricity prices will hurt the distributors and the government will
lose sales tax revenue, and may deter other foreign investors by sending
a message about the risks of doing business in Bulgaria.
Borisov
has risked a diplomatic row with the Czech Republic and EU by
threatening to withdraw CEZ's license and prosecutors are investigating
of the companies' prices and any other possible malpractice.
The
opposition BSP is the successor party to the communists and its track
record - having overseen a credit bubble that burst in 2009 and plunged
the country into recession - may worry some investors.
The economy is only slowly recovering, with growth of about 1.4 percent expected this year, which does little to raise living standards.
"We
need some new faces that have the energy and desire to revive the
current parties," said Konstantin Haralampiev, 47, an entrepreneur in
Sofia.
($1 = 0.7649 euros)