31.08.2010

The rating agency Moody\'s Investors Service affirmed Bulgaria\'s rating Baa3, with positive outlook. Moody\'s classifies the government\'s financial strength as moderate for the European Union.

The outlook on the ratings was changed to positive in January 2010, reflecting Bulgaria\'s good resilience to the global crisis. The rating agency believes that growth should resume, boosted by aid from the EU. In its opinion the agency indicates the strengths of Bulgaria, namely the EU membership which provides financial support and incentives for ongoing reforms, as well as prudent fiscal policy, low government debt and track record of maintaining sizeable fiscal reserves.

Moody\'s Investors Service says that an upgrade of Bulgaria\'s ratings is contingent upon fiscal consolidation that stabilizes the government\'s debt burden, improved budgetary transparency, and the re-emergence of a sustainable economic growth. The main driver of any upturn will be net exports, and secondarily investment.

The current account deficit has continued to narrow this year due to the relatively good performance of exports, which have increased consistently in both real and nominal terms so far in 2010, whereas imports are growing much more slowly. Given the external vulnerabilities and lack of flexibility posed by the currency board arrangement, reducing the current account deficit is an important element in long-run macro stability, points out the rating agency in its analysis.

You can find the full text of Moody\'s opinion HERE.