13.12.2014

Standard & Poor's Ratings Services lowered its long- and short-term foreign and local currency sovereign credit ratings on Bulgaria to 'BB+/B' from 'BBB-/A-3', The outlook is stable. The Agency points out as rationale for the change the situation with CCB and the provision of liquidity to another Bulgarian bank, and also the deterioration of the fiscal stance during the year. The latter S&P links with weak growth and persistent deflation in the country. The stable outlook balances the risks the Agency sees from potential vulnerabilities building up in the financial sector against still-low levels of government indebtedness. Standard & Poor's foresee upward pressure on the ratings if governance issues are addressed effectively, boosting Bulgaria's growth potential, attracting higher FDI into the tradables sector, or if the economy expands faster than they anticipate such that general government finances consolidate more rapidly.

Minister of Finance Vladislav Goranov commented the ratings:

The Credit Rating Agency takes account of past events resulting from failures in the financial system for which this Government cannot be reproached. The low economic growth and the danger of deflation are problems for a number of EU Member States. It is not by chance that the EC is developing a plan for encouraging private and public investments with the ultimate goal to increase domestic demand and enhance the potential of the European economy. The document of the Agency is not taking account of some positive results that are already a fact. These are the measures reflected in the medium term budget forecast and the policies for narrowing the budget deficit. Also the payment of the insured deposits in the CCB has started from 4 December and the payments under Operational Programme Environment are resumed. We are aware of the position of Standard & Poor's on how the sovereign ratings could be upgraded and we are convinced that the Agency will have shortly the grounds to reconsider its opinion.

You can find the full text of the announcement of Standard & Poor's HERE.