Kostov was elected chairman of the UDF in 1994. During the winter of 1996/1997, mass protests took place against
Bulgarian Socialist Party's government. The causes for the complete crisis were hyperinflation, unemployment and food shortages. The protests ultimately led to the fall of the socialist government. The UDF won the
May 1997 elections, and Kostov became Bulgaria's Prime Minister,
his cabinet eventually became the country's first post-communist government to serve its full 4-year term. Kostov and his government implemented the
currency board in Bulgaria, removed price controls and created a market economy, which put it on the path of sustainable economic growth. Under his government, other economic reforms were carried out, including privatization of state-owned enterprises on a large scale and the country started long-sought accession talks with the
European Union (which Bulgaria joined on 1 January 2007). In foreign affairs, Ivan Kostov followed a strongly pro-EU and pro-NATO course, putting the country on a firm path of integration with the
EU and
NATO. As a part of the pro-NATO stance of his government, during the
war in Kosovo he showed leadership by allowing
NATO but not
Russia to use Bulgaria's airspace despite overwhelming opposition in Bulgaria to the
NATO air campaign against
Yugoslavia and daily protest marches led by the
Bulgarian Socialist Party (the former Bulgarian Communist Party). This single act prevented Russia from resupplying
its forces occupying Pristina airport, thus denying the Russians a foothold in Kosovo. This decision ensured the success of the
NATO bombing of Yugoslavia and the
Kosovo War and ultimately led to a visit to
Sofia by
US President Bill Clinton in 1999. Against the insistence of the
United States, Kostov didn't allow refugees from Kosovo to enter Bulgaria, but arranged for them to be temporarily settled in the
Republic of Macedonia instead. Kostov's rule was characterized by media claims for massive corruption, none of which have been proven. A number of major Soviet era enterprises that were already bankrupt and in the process of liquidation were sold to the highest bidder below the price of their assets because of the tremendous debts these enterprises had. This was done to allow the new investor to save the jobs of the employees, who would otherwise have to immediately lose their job because these enterprises were in a procedure of liquidation to pay off their creditors. This sale under the book value of assets has been misused by critics of Kostov's government since in unfounded accusations of corruption. While successful in stabilizing the country, Bulgaria's
current account balance started growing negative. Some of Kostov's privatization policies were criticized by his opponents from the Bulgarian Socialist Party. Ultimately the UDF lost in the
June 2001 election to the newly formed
National Movement Simeon II. Kostov resigned as chair of the UDF and eventually left the party to establish, in 2004, a new political party,
Democrats for a Strong Bulgaria (DSB). He chaired DSB until June 2013. ==Support for Fiscal Rules==