1) Government: The cabinet is the result of a complex compromise, which seemed to be the better option in the circumstances. It is formed around two centre-right parties - GERB and the Reformist Block - with the help of the nationalist-populist Patriotic Front and the centre-left ABV of the former President Parvanov. We have not had so complex a construction in government before, so it is almost impossible to predict its longevity. A lot depends on two factors. First, how the government is going to tackle the banking crisis and the energy sector imbalances. Second, whether the four parties are prepared to make the necessary compromises in their everyday communication. The appointments of officials in the administration has already produced certain tensions, but for now the government is weathering them well. If it survives the first six months, it will have a chance to stay for four years. A stabilizing factor is the weakness of the opposition and the lack of pressure for new elections - the public has been exhausted by the political turmoil of the last two years and is eager for a period of relative tranquility. Trust, if any, is highly conditional however, and could be easily forfeited.
2) Policies: The priorities of the government are, first, to secure financial stability by amending the budget law. Certain deficits (3.7% of GDP) will be produced, but this will ensure the tackling the CCB bankruptcy, as well as public funding for various governmental programmes. Bulgaria will come under EU scrutiny for excessive budget deficit, but this is not necessarily bad - next year the government promises to fall under 3% deficit again. The overall public debt will be 28% of GDP, which is not dramatic. The second priority will be the energy sector and the renegotiation of some of the long-term contracts with energy providers (green energy and others). The task of the government will be to prevent a steep hike of the price of electricity. Third - the reform of the judiciary, which is key for the stability of the cabinet, since the participation in the government of the Reformist Block depends on it. The healthcare and education are the two other problematic areas, where reforms are expected.
3) Credibility: The government has sufficient credibility and public support to handle both crises well. With CCB the situation has been clarified - the guaranteed deposits are soon to be made accessible to the people. The main question is how the state is going to recover the assets of the bank (bad loans, etc.). This is not a task for the government per se - the Central Bank, as well as the prosecutors and the services need to help. On the energy front, I need to see the first steps the government makes, in order to be able to comment - yet, if they want, they can do the necessary reforms.