Bulgarian Election Winner Not Optimistic on New Cabinet

Bulgarian former Prime Minister Boyko Borissov, who won Oct. 5 elections, said he wasnt optimistic about forming a lasting coalition government and said a new vote may be possible.

The Gerb party, which Borissov said will open talks on Oct. 13, fell short of winning an outright majority, securing 84 seats in the 240-member assembly, followed by the Socialists with 39. Turnout for the snap vote was the lowest in two decades, helping a record eight parties enter parliament.

Im not an optimist, Borissov told reporters. Well make a strong effort to make a government happen, though two or three parties will be needed for that. The only thing worse than a new round of elections is an unstable cabinet formed at any cost that will fall apart in a month.

The European Unions poorest country by per-capita output faces its fifth cabinet in two years amid political turmoil over a widening budget gap, a stagnant economy, institutional corruption and European Commission pressure to push ahead with reforms. The vote was called after the Socialists lost power following the seizure of Corporate Commercial Bank AD, the countrys fourth-largest lender, in June.

The yield on sovereign euro-denominated bonds maturing in September 2024 fell 3 basis points, or 0.03 percentage point, to 2.87 percent at 12:55 p.m. in Sofia today. The cost of insuring the countrys debt against non-payment for five years using credit-default swaps fell 6 percentage points to 136, according to data compiled by Bloomberg.

The composition of the new parliament generates instability, Borissov said. We have eight parties, half of which dont talk to each other.

The second-place Socialists want higher spending on social benefits and subsidized power prices for Europes lowest paid population, while Gerb, which was ousted from power by anti-austerity protests in 2013, is seeking to cut spending.

The Socialists will decide whether theyll support a coalition with Gerb today. The coalition cabinet led by the Socialists resigned in July after a year in power over the loss of parliamentary support and a run on Corporate Commercial. The central bank placed the lender under supervision, freezing its assets and making funds unavailable to depositors.

Borissov accused central bank Governor Ivan Iskrov of doing nothing to rescue the bank, saying its the central banks job to deal with insolvent lenders under Bulgarias bank laws. He reiterated his intention to seek a replacement for Iskrov, whose term ends in October 2016. He can be replaced only if he resigns, according to the central bank law.

Borissov ruled out a coalition with the Movement with Rights and Freedoms, which represents the ethnic Turks in Bulgaria, the third-biggest party in parliament. A coalition with the Reformers Bloc, which has 23 seats, may be possible if it doesnt oppose Borissov becoming prime minister, he said.

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Bulgarian Election Winner Not Optimistic on New Cabinet