By Tsvetelia Tsolova
SOFIA, May 15 (Reuters) - Bulgaria's president appealed on Wednesday to political parties to hammer out a coalition deal after an inconclusive election at the weekend left the European Union's poorest country with no clear candidate to form a government.
Bulgaria, plagued by poverty, corruption and organised crime, has been in a state of political paralysis since nationwide protests forced the previous leadership from power, and it risks drifting further until a new government is formed.
A working government is needed urgently to negotiate EU funds for the next seven years, draft the 2014 budget and try to address popular anger over poor living conditions and high power prices that sparked the protests earlier this year.
'It is important to have a stable government. Everything else, new elections, would mean destabilisation,' President Rosen Plevneliev told reporters.
'Bulgaria does not need new elections now. This will scare away investors,' he said.
Political uncertainty has driven up the cost of insuring Bulgarian debt against default since last week.
It now costs $110,000 annually to buy $10 million worth of protection agaist a Bulgarian default using a five-year CDS contract, up from $92,000 on Friday, according to credit default swaps prices from provider Markit.
Plevneliev said he would start initial consultations on Friday with a view to convening the new parliament before the end of the month.
However, it was not immediately clear how the coalition would take shape because no single party had a majority and rivalry between parties stood in the way of them joining forces to form a government.
The centre-right party of former prime minister Boiko Borisov, who once served as a bodyguard to Bulgaria's Communist dictator Todor Zhivkov, won 30.5 percent of Sunday's vote. That was despite having been forced to resign in February in the face of the protests.
The Socialists were second with 26.6 percent, followed by the ethnic Turkish party MRF on 11.3 percent and the nationalist Attack on 7.3 percent.
The central electoral commission has not yet said how the share of the vote will translate into seats in parliament, but projections show that no group will get over the 121-seat threshold needed to form a viable government.
Borisov's GERB party has in the past ensured a majority by getting the support of Attack, but the nationalists have ruled it out this time.
GERB will be given the first opportunity to form a government, but with its chances of winning enough support slim, the president may have to invite the second largest group, the Socialists, to have a try.
The Socialists enjoy the support of MRF, but could still fall one seat short of a majority in parliament, according to projections.
The party could govern if it was able to persuade one or two lawmakers from other parties to vote with them in parliament, or ensure the backing of Attack.
(Writing by Christian Lowe; editing by Mike Collett-White) Keywords: BULGARIA VOTE/PRESIDENT
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