The international rating agency + Standard & Poor's (S & P) confirmed Bulgaria's long-term and short-term credit rating in foreign and local currency 'BBB- / A-3'.
According to S & P's aggregate assessment, the country's fiscal and external positions remain strong and economic growth expectations are seen as favorable, despite the long-term structural constraints. The positive outlook for the rating reflects the significant likelihood that Bulgaria will join the Currency Mechanism II (MP II) over the next 12 months.
The rating agency expects GDP to rise steadily at 3.3% in 2019, then slow down to 3% in 2022. Private consumption and government investment will have a major impact. Export growth is expected to recover, despite weaker external demand in 2019 due to slower economic activity in major European trading partners.
According to S & P, the progress of the Action Plan for Accession to ERM II is estimated to be significant, with most of the commitments being undertaken or being implemented.
The Agency would raise Bulgaria's credit rating when entering ERM II. Further progress in structural and institutional reforms would also increase the country's creditworthiness, notes the analysis.
S & P may reconsider the outlook to a stable one if pressure on the balance of payments or the financial sector, for example due to the accumulation of macroeconomic imbalances. The outlook may be revised to a stable one, and if progress on the path to euro area membership has been slowing over a long period.
