Credit ratings agency Fitch Ratings said it affirmed Bulgaria’s sovereign ratings at BBB-, with a stable outlook.
The agency said that Bulgaria’s investment-grade rating was underpinned by strong public finances, with low government debt backed up by the buffer of the fiscal reserve account, and continued unwinding of external imbalances.
“Low trend GDP growth is Bulgaria’s key rating weakness. Five-year average growth, at negative 0.3 per cent, is well below the ‘BBB’ median of 3.2 per cent. Per capita incomes are broadly in line with the ‘BBB’ median, but still far below the EU average. Fitch forecasts that GDP growth will only pick up gradually, to two per cent in 2015, from sub-one per cent outcomes in 2012-13,” Fitch said in its statement.
“The availability of significant EU funds (which Bulgaria is absorbing faster than in recent years) for infrastructure spending up to 2020 holds the promise of boosting potential growth. However, the latter is unlikely to rise until after Fitch’s forecast horizon.”
On the topic of anti-government protests in the country – one of the factors that prompted Standard&Poor’s to downgrade Bulgaria’s ratings outlook to ‘negative’ last month – Fitch said that the agency assumed that current political and social tensions would not escalate significantly, but noted that “continuing discontent with low living standards and perceived corruption poses the risk of renewed socio-political unrest in 2014-15.”
(Photo: Ivan Philipov)