A new political party ITN (There Are Such People), headed by popular showman Slavi Trifonov, won the July 11th snap election with a narrow lead ahead of the ex-PM Boyko Borisov’s GERB party. Trifonov will not head a potential government and has instead proposed a cabinet composed of technocrats. However, the elections failed to produce a decisive winner, with ITN announcing that it will form a minority government without reaching a coalition agreement with any other political party.

ITN's slim lead over ex-ruling GERB means minority cabinet will be deeply unstable

Our View

While we believe that the formation of a minority government is likely, it will be inherently unstable, and the risk of new elections will loom continuously. ITN has won 65 seats, significantly below the 120 needed to ensure a majority. Even with the support of protest parties (which it has little in common in terms of political platform), it will be difficult for the government to pass legislation. Without support by both the GERB and the Socialist Party, another snap election would take place in the fall. Even if the GERB chooses to support the Government, it would do so in a way that paralyzes the policy-making process.

Business Implications

MNCs are likely to experience a prolonged period of policy uncertainty and should monitor the situation closely to anticipate potential shifts in B2G demand and high decision-makers turnover. ITN’s policy program has fallen short of the need for deep restructuring of government institutions to reduce corruption and increase the efficiency of public investments. If the risk of autumn elections materializes, it unlikely to produce decisive results and may delay 2022 budget adoption and negotiations.

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