05.06.2017

The international rating agency S&P Global Ratings has upgraded Bulgaria's credit rating outlook from stable to positive. At the same time, the agency affirmed the "BB+/B" long- and short-term foreign and local currency sovereign credit ratings.

The upgraded credit rating outlook for Bulgaria reflects the expectations of S&P Global Ratings that the fiscal and external metrics will continue to improve and that the authorities will take further steps to strengthen the financial sector where the level of non-performing loans remains high.

The solid external and fiscal performance has lifted Bulgaria's credit metrics. The economy is more export driven and less leveraged than in the past.

The agency points out that Bulgaria's economic recovery will continue in 2017, with an increasing contribution from domestic demand as compared to net exports. Improvements are reflected in the labour market, thereby raising disposable incomes and private consumption. Public investment financed by EU funds will also be an important contributor to economic recovery. At the same time, Bulgaria continues to face a structural constraint from demographic challenges. Net emigration, especially of skilled parts of the labour force, and an ageing society pose challenges to economic policy and social cohesion possibilities.

The positive outlook reflects the view of S&P Global Ratings that there is a rising likelihood that it will raise its ratings on Bulgaria over the next 12 months if the favourable developments underpinning the upgrade of the outlook continue.

The rating agency could revise the outlook to stable if pressures on Bulgaria's balance of payments emerged or the financial system required substantial government support or if the declining trend in non-performing loans reversed.

You can find the full text of the press release of S&P Global Ratings here