This report covers the key macroeconomic and financial releases as well as the political events from Bulgaria for the period of July 5, 2014 - August 5, 2014.

Bulgarian President Rossen Plevneliev appointed on August 5 law professor and former Socialist lawmaker Georgi Bliznashki as interim prime minister to lead a caretaker government until October 5 early election. Bliznashki's administration will have to organise free and fair elections and eventually make some tough decisions relating to cost restructuring within the budget framework designed from the previous government of PM Plamen Oresharski. The parliament refused to update the country's revenue, expenditure and deficit targets despite concerns that it would be hard to abide by the original plan. The authorities have not yet reached consensus on how to resolve the crisis at the cash-flow insolvent Corporate Commercial Bank, which shut doors in June. The central bank has ordered a full audit of the lender's books that should produce results by late October. The balance sheet review should reveal the quality of the bank's assets and whether it is insolvent. Meanwhile, the EC is pressuring Bulgaria to give depositors access to their funds right now and threatens sanctions.

Key points:
• President appoints caretaker government
• Business confidence falls 3.2 points m/m in July 2014
• H1 budget deficit widens to EUR 509mn, reaching 1.2%/GDP
• Public debt rises 17.2% y/y to EUR 8.1bn at end-June 2014
• Bulgaria keeps current budget framework of 1.8%/GDP fiscal deficit for 2014
• Banking sector H1 net profit up 4.5% y/y to EUR 170mn
• Banking system capital adequacy rises to 21.2% at end-June 2014
• CPI deflation eases to 1.9% y/y in June 2014
• Home prices return to 0.3% y/y growth in Q2 2014 after 5.5 years