site.btaS&P Global Ratings Agency Raises Bulgaria's Economic Outlook to Positive

International rating agency Standard and Poor’s (S&P) Global Ratings raised Bulgaria’s outlook to positive from stable and affirmed the country’s long-term and short-term foreign and local currency ratings at ‘BBB+/A-2’, the Ministry of Finance said on Saturday. The press release added that the positive outlook reflects the potential for rising incomes and accelerated growth in Bulgaria, supported by improved political stability, planned reforms and the disbursement of EU funds.

The rating agency’s analysis notes that the snap parliamentary elections in April gave a majority to former president Rumen Radev’s coalition Progressive Bulgaria, "bringing to an end five years of political instability." According to the analysts, the new situation should allow the Government to implement anti-corruption measures, meet the conditions for receiving Bulgaria’s final tranches under the Recovery and Resilience Plan, and begin fiscal consolidation, the statement said.

Standard and Poor’s forecasts that Bulgaria’s gross domestic product (GDP) per capita will continue to increase, noting that the indicator has already doubled since 2019. Net government debt remains moderate by global standards and is expected to stay below 30% of GDP until 2029.

According to the agency, the conflict in the Middle East will slow Bulgaria’s growth in the short term, but by 2029 GDP growth will average 2.6%, exceeding that of the eurozone. Analysts believe that the structure of Bulgaria’s energy mix should help mitigate the effects of the energy crisis.

Among the factors considered that could lead to a rating upgrade are stronger economic growth in Bulgaria and an increase in average income per capita, supported by reforms and the absorption of EU funds.

Standard and Poor’s could revise the country’s outlook back to stable over the next two years if Bulgaria’s economic growth proves weaker than expected. Another factor for a downgrade of the outlook would be a significant deterioration in the country’s fiscal position, the statement added.