The “Blue” Government and Rapid Reforms
The provisional government, led by the “blue” mayor of Sofia, Stefan Sofianski, took swift measures to stabilize Bulgaria’s financial situation and introduced the currency board. In the elections on April 19, 1997, the newly formed Allied Democratic Forces (ADF) faced a decisive defeat against the Socialists, resulting in an absolute parliamentary majority for the ADF. A month later, Ivan Kostov, the leader of the ADF, assumed leadership of the new “blue” government, enjoying broad social support. The primary challenge before the cabinet was the implementation of much-needed reforms.
Kostov’s Leadership and Foreign Policy
During Prime Minister Ivan Kostov’s rule from 1997 to 2001, often affectionately referred to as the “Commander” by his supporters, efforts were concentrated on rebuilding the country after the devastating impact of Videnov’s cabinet. Kostov’s foreign policy played a crucial role in securing Bulgaria’s membership in the International Monetary Fund and International Bank for Reconstruction and Development. The country shifted toward a policy of political and economic alignment with the West, particularly the USA. Concurrently, the domestic market faced an influx of goods of questionable quality, mainly imported from the Far and Near East Guided Turkey Tours .
Financial Reforms and the Rise of the “Grey Economy”
The financial system underwent significant reforms from 1997 to 1999, impacting small businesses and expanding the basis for the “grey economy.” This informal sector gained prominence as people, facing reduced incomes, sought ways to avoid social security payments and other financial obligations to the state. The ties between official institutions and agencies with criminal economic structures became evident. Prime Minister Rostov’s personal control over various economic spheres generated discontent, leading some former supporters to leave the “Blue Alliance” and form their own organizations and parties. By the year 2000, a substantial portion of those who had voted for the ADF in 1997, particularly representatives of small and medium-sized private businesses, were anticipating a change.
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