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The international S&P Global Ratings agency affirmed its 'BBB-/A-3' long- and short-term foreign and local currency sovereign credit ratings on Bulgaria. The outlook was also affirmed and remains positive.

S&P Global Ratings summarises that Bulgaria's monetary conditions continue to improve, credit conditions support growth, and the country is making steadfast progress on entering the Exchange Rate Mechanism II (ERM II).

The Rating Agency also anticipates robust growth in 2018-2021 on the back of strong private consumption and accelerating investments. The continued absorption of EU funding and the tightening labour market conditions will support productivity over time.

The positive outlook reflects the considerable likelihood that Bulgaria will join the Exchange Rate Mechanism II (ERM II). The Agency believes that this aspiration toward eurozone membership would also support the country's continued effort to address remaining institutional impediments and structural issues.

S&P Global Ratings could raise the ratings on Bulgaria if the Bulgarian lev enters ERM II, which would further support the credibility and effectiveness of monetary policy. Additional progress on institutional and structural reforms, for example regarding the judiciary system, could also facilitate improving creditworthiness.

The Agency could revise the outlook to stable if the improvements in banks' balance sheets reversed or if pressures on Bulgaria's balance of payments emerged, for example due to rebuilding of imbalances or an external shock to Bulgaria's open economy. The outlook could also be revised to stable if Bulgaria's path toward euro adoption were derailed for a protracted period.

You can read the full text of the S&P Global Ratings press release here.

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