Fitch re-affirms Bulgaria’s ‘BBB’ credit rating, outlook positive

Fitch Ratings has re-affirmed Bulgaria’s sovereign long-term foreign and local currency Issuer Default Ratings (IDRs) at ‘BBB’, maintaining a positive rating outlook.

The credit ratings agency said that the outlook reflected “prospect of euro adoption, which would lead to significant improvements in external metrics.”

“In Fitch’s view, short-term downside risks tied to the coronavirus pandemic have eased and are more than offset by prospects of substantial EU funding for investment and a broad commitment to macro and fiscal stability (anchored by the inclusion since July 2020 of the Bulgarian lev into Exchange Rate Mechanism II,” the agency said.

Fitch said that Bulgaria’s new government, voted into office in December 2021, had “significantly reduced near-term political uncertainty” and noted that the Cabinet remained committed to joining the euro in January 2024.

The government’s agenda to pursue an anti-corruption agenda and more effective public spending could be delayed by the current high energy prices, where “public support schemes could put some pressure on the budget”, and the coronavirus pandemic, “accentuated by the lowest vaccination rate in the EU and an underfunded healthcare system,” Fitch said.

But despite those challenges, the credit rating agency said that it was optimistic about Bulgaria’s economic prospects, projecting 3.7 per cent growth in 2022 and 4.5 per cent in 2023.

Fitch said that progress towards joining the euro area and “an improvement in growth potential”, either through structural reforms to improve the business environment or effective use of EU funds, could lead to upgrading Bulgaria’s credit rating.

On the downside, negative action could be prompted by “a significant delay in the timeline of eurozone accession” or a prolonged rise in public debt, the “materialisation of contingent liabilities on the sovereign’s balance sheet” or weaker growth prospects.

(Photo: kavitakapoor/

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The Sofia Globe staff

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