The revision reflects expectations for a significant deterioration in growth in Bulgaria, as well as in other countries, in 2020, as a result of the introduction of measures to contain the Covid-19 pandemic.
The rating agency reports an increase in macroeconomic and fiscal risks, but given that in recent years the macroeconomic imbalances of the country have shrunk significantly, the expectations of analysts are that the Bulgarian economy will recover in 2021.
According to S&P Global Ratings, Bulgaria is entering the current recession with a strong external position after years of current account surplus.
Government debt is low and the country has reported budget surpluses over the past four years. According to the rating agency, the policy's response to overcoming the consequences of the pandemic will not jeopardise the stability of public finances, stating that the country's currency board regime promotes prudent fiscal policy.
Analysts from S&P Global Ratings also note that Bulgaria is making steady progress towards joining VM II and the banking union. Restrictions to the rating are the institutional environment and the low GDP per capita compared to other European countries.
Among the main factors that could lead to a rise in the rating are the return to the previous growth trajectory without accumulating large macroeconomic imbalances, and an improvement in external balances exceeding the Agency's expectations. Accordingly, the emergence of external, macroeconomic or fiscal imbalances are listed among the factors that would lead to a downgrade.
Standard & Poor's revises Bulgaria's outlook from positive to stable
The international rating agency S&P Global Ratings (“Standard & Poor's”) confirmed Bulgaria's long-term and short-term foreign and local currency credit rating 'BBB/A-2' and revised the outlook from positive to stable, the press center of the Ministry of Finance said.tags:
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