Bulgaria
sacked its finance minister on Monday after a weekend of demonstrations over
electricity prices brought tens of thousands onto the streets, raising pressure
on a government that had until recently defied political gravity by retaining
popularity in the teeth of an austerity drive.
Simeon Djankov, a former World Bank official who won the respect of financial
markets for undertaking painful reforms but courted controversy in
Bulgaria
as a
fiscal hawk, was relieved from his duties as finance minister by Prime Minister
Boyko Borisov on Monday, the government said in a statement. The prime minister
proposed Tomislav Donchev, the minister responsible for European Union funds,
for the post, the statement said.
The news, which took analysts by surprise, comes as Mr. Borisov's ruling
center-right Citizens for European Development of Bulgaria party, or GERB is
facing mounting pressure after a series of anti-austerity protests and
corruption scandals have dramatically eroded popular support for its policies.
Sunday saw
Bulgaria
's
largest demonstration for more than a decade as tens of thousands of protesters
gathered in more than a dozen regions, paralyzing city centers and blocking
highways. Demonstrating to vent their anger against high electricity bills, the
protesters demanded the resignation of the cabinet and the renationalization of
power distributors. Electricity prices are politically sensitive in the
European Union's poorest member state, where power bills bite off a large chunk
of monthly incomes, especially during the winter.
Analysts warned that the removal of Mr. Djankov, the government's most
high-profile technocrat, would likely foreshadow a shift toward more populist
economic policies ahead of national elections tabled for July.
"Djankov was the figure who symbolized fiscal and financial discipline. The
whole economic policy was based on these priorities," said Daniel Smilov,
program director at the Center for Liberal Strategies, a Sofia-based think
tank.
"Now there is an expectation that some change in economic course is
imminent and that may make some people nervous," he said.
Bulgarian assets appeared to speak to market jitters on Monday, with stocks
dropping some 0.8% on news of Mr. Djankov's departure.
There were signs that Czech power company CEZ AS (BAACEZ.PR), which has been
the focus of popular anger at rising energy prices, could be in the crosshairs
of a more populist policy.
Bulgaria
's
Energy Economy and Tourism Ministry said on its website on Sunday that the
national energy regulator was mulling whether to revoke CEZ's license due to
allegations the company violated public-procurement rules. CEZ, which insists
it hasn't breached regulations, had 9.9% of its 2011 revenue from
Bulgaria
,
making it the company's second-biggest market after the
Czech
Republic
.
Bulgaria
's
opposition leaders on Monday sought to build pressure on Mr. Borisov, stressing
that the removal of Mr. Djankov wouldn't alleviate public anger.
"This move means Borisov is panicking... The change is not enough, we need
a new government and new rules," said Ivan Kostov, former Prime Minister
and leader of the rightist Democrats for Strong Bulgaria party was quoted as
saying by Bulgarian state media.
On the periphery of the euro zone, but overwhelmingly dependent on the bloc's
larger economies for growth, Bulgaria won admiration from Brussels by reducing
its budget deficit to 0.5% of gross domestic product last year from 2% in 2011.
The economy managed a 0.5% expansion in the fourth quarter from a year earlier,
marking its 10th successive quarter of growth
But opinion polls in recent months showed a precipitous decline in the ruling
party's ratings after three years of austerity policies, corruption scandals
snaring cabinet ministers and a lack of significant results in fighting crime
and graft.
A lead of 15 percentage points last year has evaporated in recent months,
placing GERB level with the Bulgarian Socialist Party, according to recent
polling. Analysts say that electoral arithmetic would make it very difficult
for Mr. Borisov to form a single-party government at national elections and
could prompt the prime minister to call a snap poll in the spring.
On the streets of
Sofia
on
Monday, residents appeared polarized about the news.
Boiana Stoyanov, a 34-year-old hotel manager said Mr. Djankov had been made a
"scapegoat" and his ouster showed the upcoming election campaign
"will be dirty." Tsvetan Tcherneva, a pensioner who demonstrated in
Sofia
on
Sunday, said he was surprised Mr. Djankov lasted so long. "He brought
American ideas and took an axe to pensions and to state wages. The government is in serious
trouble now," he said.