Rightist GERB holds lead in Bulgaria's election

By Angel Krasimirov

SOFIA (Reuters) - Bulgarians vote on Sunday in an election forced by protests over poverty and corruption, with expectations of a close result that could leave the poorest EU country without a working government.

The rightist GERB party, which resigned after violent demonstrations in February, is running neck-and-neck with the Socialists. GERB pledges to keep debts under control, while the Socialists say they will spend more and create jobs.

But six years after Bulgaria joined the European Union, disaffection with the political elite as a whole is widespread in a country of 7.3 million where unemployment is close to an eight-year high.

The activists who brought down the GERB government plan more protests for polling day and a fifth of voters are still undecided which party to back in the parliamentary election.

"People are poor, people are discouraged," said Rumen Blagoev, 62, a retired policeman in Sofia who plans to vote Socialist and complained that Bulgaria had been badly governed for 20 years.

While the euro zone has been preoccupied by its debt crisis, the troubles in Bulgaria show the risks of growing political and economic upheavals on the European Union's fringes.

Under GERB, Bulgaria has kept one of the lowest debt levels in the EU to maintain a currency peg to the euro, but the economy is expected to grow at only about 1 percent this year and the average monthly wage is 400 euros ($520).

Led by heavily built former bodyguard Boiko Borisov, GERB has also suffered political damage from a wiretapping scandal. Bulgarian state security officers also seized 350,000 fake ballot papers from a printing house belonging to a GERB local councilor, prosecutors said on Saturday.

But with a recent opinion poll giving it 24 percent to 23.6 percent for the Socialists, GERB could still emerge as the Balkan country's largest party.

That would give it first chance to form a government, possibly in alliance with nationalist Attack and the pro-business Bulgaria for the Citizens, led by former EU commissioner Meglena Kuneva.

The Socialists have previously partnered with the ethnic Turkish MRF and could also seek Kuneva's backing.

But an election characterized more by mud-slinging than policy debate could make it harder for anyone to form a coalition.

Although business is deeply unhappy with corruption in Bulgaria, Borisov's record of keeping borrowing in check wins him favor from investors.

The last time a Socialist government was in power, between 2005 and 2009, Bulgaria went through a credit boom, bust and deep recession.

Whoever wins, there is little room for any government to spend more.

"An undercurrent of discontent persists. So far, the major demands of the protesters - for lower energy prices - have not been fully addressed and unemployment, low incomes, and political corruption are also being highlighted," said Otilia Simkova, an analyst with political risk consultancy Eurasia.

(Writing by Sam Cage; Editing by Matthew Tostevin)

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