“As you probably know the hottest news is the political instability in Bulgaria,” says Nikolai Gouginski, Partner at Djingov, Gouginski, Kyutchukov & Velichkov in Sofia, referring to "the fall-out of the recent political election.”
Gouginski points to the November 6th and 13th Presidential elections in the country that saw the opposition party’s candidate — General Rumen Radev — elected. Radev’s election, together with a strong showing by other populist candidates was, according to Gouginski, “a demonstration of a shift among the general population,” and triggered the immediate resignation of the center-right government of Prime Minister Boyko Borissov. As a result, and at least until the next Parliamentary election — which Gouginski thinks is unlikely to take place until March, at least — there’s real uncertainty in the country as to whether an interim government will be appointed by the President, or whether Parliament will vote a new Government. Thus, according to Gouginski, “at the moment the governmental crisis leads the agenda in Bulgaria — including the economic agenda.”
“It’s a difficult time,” Gouginski admits, “as there’s no certainty what kind of government we’ll get. It’s all unknown.” Gouginski thinks the result is a potential slowdown in investment in the country, as investors are “likely to wait for the dust to settle,” and for clarity to arrive "about the program and economic priorities of the new government.” Gouginski believes that "especially state-driven programs are likely to be put on hold.”
Radev’s candidacy was supported by the Bulgarian Socialist Party, which is a strong contender for the Parliamentary Elections as well, and which is proposing — if it leads the resulting government — to eliminate the flat income tax and replace it with a progressive tax on personal income. “There’s been no discussion of the abolition of the flat corporate rate,” Gouginki says, “but that may also be put on the table by a new Socialist government.” In addition, Gouginski describes a “difference in the potential management of state assets, including the concession for the Sofia airport, as obviously socialists are not big on the concept of a public-private partnership for this asset.”
When asked if he expects the installment of a new government next spring to be a real obstacle to investment, Gouginski is cautious. “I won’t go so far as to say Socialists would have a negative effect,” he says. “But obviously there’s a difference in economic priorities, and at the moment there’s just no certainty about who’s going to be in charge for years to come."
In "The Buzz" we interview experts on the legal industry living and working in Central and Eastern Europe to find out what’s happening in the region and what legislative/professional/cultural trends and developments they’re following closely.