Fitch Ratings has re-affirmed Bulgaria\u2019s sovereign long-term foreign and local currency Issuer Default Ratings (IDRs) at \u2018BBB\u2019 and raised its rating outlook to positive.<\/p>\n
The credit ratings agency said its decision reflected \u201cthe dissipation of macroeconomic risks stemming from the Covid-19 pandemic, underpinned by a more resilient economy and a sound policy framework,\u201d as well as the country\u2019s continued progress towards adopting the euro.<\/p>\n
The pandemic and political uncertainty presented short-term downside risks to the outlook, but were offset by \u201cprospects of substantial funding for investment from the EU and broad commitment to macro and fiscal stability,\u201d the agency said in its rating decision.<\/p>\n
Fitch cut its estimate of Bulgaria\u2019s economic downturn in 2020 to four per cent, compared to an earlier forecast of 5.7 per cent, attributing it to more resilient private consumption, while manufacturing was less affected due to lighter restrictions than in other EU countries.<\/p>\n
Bulgaria\u2019s statistics body is due to announce preliminary gross domestic product data on March 9.<\/p>\n
Fitch also noted that Bulgaria\u2019s public finance metrics have remained strong compared to other countries rated at BBB, despite the economic impact of the pandemic. \u201cRevenue outperformed the revised budget targets, thanks in part to improvements in tax collection and a less pronounced economic contraction than previously expected,\u201d the agency said.<\/p>\n
Parliamentary elections, scheduled for April 4, were likely to result in a \u201cfragmented\u201d National Assembly, which created \u201chigh uncertainty about the shape of the next government,\u201d Fitch said.<\/p>\n
\u201cAlthough government formation could take time and a multi-party coalition could prove highly unstable, at present Fitch does not see major risks to economic policy or to Bulgaria\u2019s commitment to the EU,\u201d the ratings decision said.<\/p>\n
Political \u201cdynamics\u201d could also delay \u201cmeeting structural commitments\u201d required by Bulgaria\u2019s efforts to join the euro zone, which it aims to do by January 2024, Fitch said, noting that \u201cat present, there is a commitment across the political spectrum on euro adoption.\u201d<\/p>\n
Progress towards the euro zone accession and \u201can improvement in growth potential\u201d, through structural reforms or effective implementation of EU funds, were the main factors that could lead to positive rating action, Fitch said.<\/p>\n
On the downside, negative action could be prompted by \u201cadverse policy developments, for example following period of political paralysis, that reduce confidence in economic recovery and the policy framework\u201d or a prolonged rise in public debt.<\/p>\n
Source: https:\/\/sofiaglobe.com\/<\/p>\n","protected":false},"excerpt":{"rendered":"
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