By Angel Krasimirov
SOFIA (Reuters) - Bulgaria's parliament cleared the way on Friday for the government to boost spending, overturning a presidential veto as demonstrators from both sides of the country's political divide rallied in downtown Sofia.
The Socialists and their junior coalition partner, the ethnic Turkish MRF party, won the support of the nationalist Attack party to overturn the veto by President Rosen Plevneliev of plans to increase the fiscal deficit and issue new debt.
That will allow cabinet to spend more and raise up to 1 billion levs ($677.5 million) in new debt this year to stimulate the struggling economy of the European Union's poorest state.
Lawmakers interrupted their summer holiday for the vote.
Plevneliev vetoed the revisions to the 2013 budget last week, saying the government had not shown enough transparency on how it plans to use the extra public money.
Thousands of Bulgarians have held nearly nine weeks of protests in the capital against alleged government corruption.
They also oppose the additional spending, saying it will merely increase the country's debt or benefit pro-government businesses at others' expense, a concern shared by some local economists.
On Friday in largely peaceful protests, anti-government demonstrators gathered around the parliament building, chanting "Mafia" and "Resign".
Riot police separated them from a pro-government faction that rallied near parliament.
The Socialists have accused the president, who has largely ceremonial powers, of siding with the opposition GERB party and said the veto was part of a campaign aimed at blocking the cabinet's efforts to help boost the economy and the most disadvantaged Bulgarians.
"The veto was part of the strong efforts to prevent the recovery of the parliamentary and normal democratic system of the state," Socialist leader Sergei Stanishev told parliament.
Prior to the veto, the government said it would increase the 2013 budget deficit to 2 percent of gross domestic product from 1.3 percent and raise up to 1 billion levs to finance the shortfall and payments on maturing debt.
The cabinet, led by non-partisan Plamen Oresharski, is composed of Socialists and the ethnic Turkish MRF and has been in power for just two and a half months.
It controls barely half of the seats in parliament and relies on the passive support of Attack to stay in office.
($1 = 1.4759 Bulgarian levs)
(Reporting by Angel Krasimirov; Editing by John Stonestreet)