War-related concerns have put the new government’s plans and a number of business transactions on hold, according to Schoenherr Local Partner Ilko Stoyanov.
"In terms of the political situation, right now, I don’t envy the government that came into power around two months ago," Stoyanov says. "Before that, in Bulgaria, a regular cabinet was not functioning, as the parties were unable to form a majority. At the moment, the coalition consists of political parties with very diverse political views, including technocratic, democratic, populist, and the former communist party. It is relieving that, eventually, we have a functioning government, but on the other hand, the politicians do not have any experience on how to deal with the world." According to Stoyanov, the government’s own agendas such as attracting FDIs and improving business opportunities, are completely off the table, replaced by the new war-related concerns.
"Interestingly, the government has an openly pro-Western and pro-NATO policy," Stoyanov adds. "Recently, a Minister of Defence was fired due to the fact that he referred to Ukrainian events as a 'special operation,' rather than 'a war'."
"Another major political issue is reforming the judicial system and prosecutor’s office," he points out. "They have been accused of being dependent on the ruling party, imposing selective justice, and rendering favorable decisions for government-affiliated individuals. Bulgaria has also been criticized by the EU Commission for the absence of high-level corruption cases."
With regards to the business world, Stoyanov says that "the past 3 months, as well as the entire year of 2021, marked a good period in terms of M&A transactions. In 2020, many transactions were put on hold and it created momentum for the following year." According to him, the energy and TMT sectors have seen a particularly large number of transactions.
"However, in the past period, several deals were suspended, mainly due to the war," Stoyanov adds. "It is hard to predict how businesses will develop, considering uncertainty and the rising inflation. There is a purely emotional moment regarding the ongoing war, and society as a whole and businesses, in particular, have concerns as to whether it will affect any future transactions."