Bulgaria New Finance Minister to Oust Central Bank Governor

Simeon Djankov is pictured here with his wife Caroline Freund, also a World Bank economist, who is considering an advisory role with the Obama administration's economic team. Photo by BGNES

A World Bank economist, who has been tipped as Bulgaria's next finance minister, has given indications that the central bank governor, reelected in a highly controversial parliamentary vote just before the elections, may be forced out of office.

"Ivan Iskrov re-election is illegal and such practices are unacceptable," Simeon Djankov told the morning broadcast of the Bulgarian National TV channel.

Dyankov, a World Bank analyst and chief economic advisor to the new center-right GERB party, which won by a wide margin the general elections on July 5, stressed that there are many good experts in this sector in Bulgaria, hinting at Iskrov's imminent replacement.

Iskrov reelection at the end of May was believed to be a trump card for pressing the party of Simeon Saxe-Coburg into making a number of concessions in the sharing out of key posts in the state among members of the ruling coalition.

This scenario failed after the ruling Socialist-led coalition suffered a crushing defeat in the general elections on July 5, while the centrist party of Saxe-Coburg, whose member Iskrov is, even did not manage to make it to the next parliament.

Bulgaria's prime minister-elect, Boyko Borisov, said a day earlier he would seek Dyankov as his finance minister, after a sweeping election victory.

Dyankov said he has not yet discussed this with Borisov, but specified that the names of all the ministers in the next government will be known by the end of the week.

The economic program of Borisov's government is expected to seek to shore up the budget , which is sliding toward a deficit this year as unemployment rises, and hasten Bulgaria's entry into the exchange-rate mechanism that serves as prelude to adopting the euro.

Bulgaria, the European Union's poorest member, has already entered recession with its economy shrinking 5% from January to March and contracting 1.6% in the fourth quarter on a quarterly basis.

Bulgaria's gross domestic product (GDP) contracted by 3,5% in the first quarter of 2009 on an annual basis, the first time that the country's GDP marked a drop year-on-year since the financial and economic crisis in 1997.

Bulgaria currently operates in currency board regime and the lev is pegged to the euro.

 

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