Fitch Ratings Affirms Bulgaria's IDRs at 'BBB'; Outlook Stable
104 ECONOMY - FITCH RATINGS - BULGARIA - RATING
Fitch Ratings Affirms
at 'BBB'; Outlook Stable
Sofia, November 17 (BTA) - Fitch Ratings has affirmed Bulgaria's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BBB', with a stable outlook. The Short-Term Foreign and Local Currency IDRs have been affirmed at 'F2', the Finance Ministry said, citing a Fitch report released on Friday.
"Bulgaria's ratings are supported by its sound external and public finances, credible policy framework aimed towards gradual accession to eurozone membership and stable growth prospects. The ratings are constrained by lower income levels compared with the current 'BBB' median, and weak demographics which could constrain growth and weigh on government finances over the long term," the report reads.
Fitch expects real GDP growth to remain largely unchanged at 3.7 per cent in 2018, before slowing to 3.5 per cent in 2019 and 3 per cent in 2020.
Fitch has revised upwards its forecasts for consumer prices (annual average) to 2.8 per cent year on year in 2018, 3 per cent in 2019, and 2.9 per cent in 2020.
Monetary policy revolves around the operation of a credible currency board arrangement against the euro. Bulgaria's sovereign net foreign assets (forecast at 33 per cent of GDP in 2018) and external liquidity ratio (forecast at 343 per cent in 2018) are high compared with the 'BBB' median of 5.3 per cent and 143.7 per cent, respectively, and will remain key credit strengths over the forecast period.
Bulgaria's fiscal finances are strong relative to peers. Fitch expects the Bulgaria's general government surplus to stand at 0.5 per cent of GDP in 2018 (projected current 'BBB' median: -2.4 per cent).
Government debt levels (on both gross and net basis) remain far lower than both the 'BBB' median as well as most other EU Member States. Fitch projects that the general government debt/GDP ratio will continue to decline, reaching 19.5 per cent in 2020.
According to the report, Bulgaria's external finance metrics outperform the majority of its 'BBB' peers. Gains in export market shares, sustained export competitiveness, anchored by real effective exchange rate stability have enabled Bulgaria to run current account surpluses.