24.02.2020

The international credit rating agency Fitch Ratings has affirmed Bulgaria’s long-term foreign and local currency Issuer Default Ratings (IDR) at “BBB”. The outlook remains positive.

Bulgaria's ratings are supported by its strong external position and traditionally good fiscal parameters, as well as by the credible policy framework, underpinned by EU membership and the clear perspective for euro membership. The ratings are constrained by the lower income levels compared with the current 'BBB' median and unfavourable demographics, which could hinder growth over the long term.  Governance indicators are in line with peers.

Fitch Ratings continues to expect a solid fiscal performance in 2020 – 2021, supported by stable macroeconomic environment and conservative budget management. Fiscal outturns were on the upside last year thanks to strong revenue.

The rating agency maintains its GDP growth forecast of 3.3% in 2020 – 2021. The deteriorated external environment has not yet significantly affected Bulgaria. However, ongoing global uncertainty and a projected recovery in imports (thanks in part to a pickup in investment), will likely lead to sharper slowdown in growth in the coming quarters.  As in other countries in the region, domestic demand will continue to be a factor conducive to growth, underpinned by favourable financing conditions and a strong labour market.

Among the main factors that could lead to positive rating action the agency ranks first the formal admission into ERM II. Respectively, among the factors that could lead to negative rating action the agency ranks first a halt to the euro accession process.

You can find the full text of the press release here.