Банкеръ Daily


Fitch Confirmed Bulgaria’s Credit Rating But Downgraded Outlook

The rating agency expects a 5.1% decline in the Bulgarian economy

The international agency Fitch Ratings affirmed Bulgaria's 'BBB' rating and revised the outlook for long-term foreign and local currency ratings from 'positive' to 'stable'.


The rating agency revised its GDP growth forecast for BG for 2020 from 3.2% to minus 5.1%, reflecting the impact of the Covid-19 pandemic on economic activity in the country. In 2021, growth will recover to 4.2%, with consumption and investment reporting a significant increase. The contribution of net exports to economic growth will remain small 0.1 pp due to strong domestic demand.


Fitch Ratings expects the 2020 budget balance to worsen as a result of the economic downturn and fiscal stimulus in response to the pandemic. The government has committed significant funds to support the economy, including a measure to protect employers in maintaining jobs and investing in health care.


Given the need for additional financing for the country in 2020, the rating agency expects government debt to increase by 8.1 percentage points. compared to 2019. At the same time, Fitch awaits the prudent fiscal policy with sustainable debt management to continue, the Treasury said.


Among the key factors leading to an increase in the rating is the progress made in the process of joining the euro area, improving the growth potential of the economy, a steady improvement in external balances and fiscal position.  Accordingly, among the factors that would lead to a downgrade is a continuous increase in public debt caused by fiscal loosening, the emergence of external imbalances and / or a deterioration in external competitiveness.

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