23.03.2019

The international rating agency Fitch Ratings has upgraded Bulgaria’s long-term credit rating outlook from stable to positive. The agency has affirmed Bulgaria’s long-term foreign- and local-currency credit rating at “BBB”, the country ceiling at “A-” and the short-term foreign- and local-currency credit rating at “F2”.

The upgrade of the outlook to positive reflects the estimates of Fitch Ratings that the key rating drivers for Bulgaria outperform its “BBB” peers.

Budget outturns have over-performed, further strengthening Bulgaria's fiscal and debt position compared with other countries. The estimated budget surplus in 2018 on an accrual basis appears to be higher compared with the previous forecast, which is the best performance in the last 20 years. In Fitch's view, Bulgaria's commitment to prudent fiscal policies limits the risks for the country. The rating agency expects GDP growth to gain momentum in 2019-20 (averaging 3.3%) after slowing more than expected in 2018, to 3.1%.

According to the agency Bulgaria's external finance metrics continue to improve and outperform the majority of its “BBB” peers. At end-20018 the positive external position of the country strengthened, while “BBB” peers are net debtors.

Fitch indicate the factors that could, individually or collectively, lead to positive rating action. These include continued improvement in external and fiscal balance sheets, progress toward eurozone accession, favourable growth prospects that lead towards faster convergence with income levels of peers.

The future developments that could, individually or collectively, lead to negative rating action include emergence of external imbalances, deterioration of external competitiveness, as well as a sharp rise in public debt driven by fiscal easing or the materialisation of contingent liabilities on the sovereign's balance sheet.

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