By Angel Krasimirov
SOFIA (Reuters) - Bulgaria's largest party GERB declined on Thursday to try to form a new government, opening the way for the rival Socialists to put together a technocrat administration and end a political impasse.
Seeking to break a deadlock that could undermine the European Union's poorest economy, President Rosen Plevneliev immediately passed the baton to the Socialists, whose proposed government could be voted on next week.
The center-right GERB won most seats in a May 12 election but cannot command a majority, as other parties are shunning it after its resignation during protests against low living standards in February.
With every fifth Bulgarian living under the poverty line and unemployment at an eight-year high, the country needs a working government to draft a 2014 budget and negotiate EU funds to 2021 - key to reviving the economy and creating new jobs.
"Every day, every hour is important for Bulgaria to have a government, so please allow me to return the mandate now, so that you can continue with your consultations," a subdued GERB leader Boiko Borisov told Bulgaria's president, local media reported. Borisov refused to answer questions from journalists.
The Socialists are proposing a cabinet of experts headed by Plamen Oresharski, a former finance minister in a Socialist government who is not a party member. It would aim to ease public anger and the concerns of investors.
"We are well aware that people have no patience, that their disappointment is so deep that the government will not have a spare day in which it will not have to prove it is working on their problems," Socialist leader Sergei Stanishev told reporters.
With allies from the ethnic Turkish MRF, the Socialists are one seat short of a majority but analysts say the proposal is likely to win parliamentary backing with support from or abstentions by individual MPs from the nationalist Attack.
RISK OF COLLAPSE
The divisions in parliament had prompted concerns that Bulgarians might have to return to the polls, so the prospect of a working government will bring some reassurance of stability. But short of a majority, the proposed cabinet will struggle to push through serious reforms and could easily collapse.
With an economy that is barely growing, it will not be easy to keep debt low to maintain a currency peg to the euro while also spending more to soothe public anger.
The Socialists have promised to maintain fiscal discipline but also to create jobs, keep down electricity costs - which provoked the February demonstrations - and help the poorest pay their bills.
The proposal looks set to win parliament's support because only a simple majority of the MPs registered for the vote is needed. That means it will be approved - possibly as soon as Tuesday - if some of Attack's 23 deputies boycott the vote, as they did for election of a new speaker.
"The so-called 'Oresharski Plan' is much more of a brand aimed at calming people down than a real plan with concrete policies," said Petar Ganev, an economic analyst with the Sofia-based Institute for Market Economics.
"Still, it takes a serious commitment to keep the currency peg to the euro and the fiscal stability. This is a good signal to investors."
(Additional reporting by Tsvetelia Tsolova; editing by Andrew Roche)