By Tsvetelia Tsolova
SOFIA (Reuters) -Protest parties are gaining ground ahead of a parliamentary election in Bulgaria amid public anger over corruption, which has been fuelled by allegations of misconduct against former Prime Minister Boyko Borissov's government.
Sunday's vote will be the country's second in three months, after an April election resulted in a fragmented parliament that failed to produce a government, underscoring deep divisions over the legacy of Borissov's decade-long rule.
Opinion polls currently put his centre-right GERB party tied on 20% support with the new anti-establishment party founded by popular TV host Slavi Trifonov, There is Such a People (ITN). GERB won 26.2% of the vote on April 4.
Rising support for ITN and two small anti-graft groupings have given them a fighting chance of forming a functioning government, although opinion polls suggest the three are not likely to gain parliamentary majority.
Bulgaria, the poorest member of the European Union, has a long history of corruption. A streak of scandals coming to light in recent months has dominated public debate and election campaigning.
"The last election brought Borissov out of power. This one will define what future and governance Bulgaria will have," Hristo Ivanov, one of the leaders of anti-graft Democratic Bulgaria, told Reuters.
Prime Minister Stefan Yanev's caretaker government has accused Borissov's cabinet of spending billions of levs of taxpayer money without transparent procurement procedures.
In late May, it found that state-run Bulgarian Development Bank, set up to support small business, had extended 946 million levs ($590 million) in loans to just eight companies.
GERB denies wrongdoing and says the allegations are politically motivated actions by the interim government, which was appointed by a strong critic of Borissov, President Rumen Radev, after the inconclusive April election.
"They expected to smash us, but we are stronger than ever. People are with us because we have build a lot and learnt from our mistakes," Borissov told a campaign gathering in northern Bulgaria on July 4.
ITN and its anti-graft allies pledge to overhaul the judicial system and put an end to a climate of impunity if they succeed in forming a cabinet.
A former bodyguard of late communist-era dictator Todor Zhivkov, Borissov, 62, has held the reigns of the Balkan country with a mixture of patronage and populism from 2009, his support bolstered by hefty public spending on infrastructure projects.
But during a massive outpouring of public anger against graft last year, protesters accused Borissov of working in cahoots with the country's chief prosecutor for the benefit of local oligarchs and businesses close to his party.
Last year, a number of Bulgarian websites published photos purporting to show Borissov's alleged wealth, including images with a nightstand packed with gold bars and 500-euro bills.
Borissov has denied having any hidden wealth, and has said the photos were part of an elaborate set-up engineered by his political opponents to embarrass him.
Last month, Washington imposed sanctions on several Bulgarians and companies linked to them for alleged significant acts of corruption in the country, which is ranked as the EU's most corrupt state by Transparency International.
Many Bulgarians accuse Borissov of going through the motions in fighting corruption.
"I truly hope that things can change. First the golden bars, now the way public funds are being handed to favoured companies ... all while my grandmother has to choose which day to buy meat and which day not," said 23-year old Nikolay Petrov.
(Reporting by Tsvetelia TsolovaEditing by Frances Kerry)