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Standard & Poor’s confirms Bulgaria’s credit rating at BBB

Tue, Jul 27 2010 10:54 CET

byDnevnik.bg

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Standard & Poor’s confirms Bulgaria’s credit rating at BBB

Photo: Julia Lazarova

Global rating agency Standard & Poor’s (S&P) has affirmed the stable outlook for Bulgaria’s rating at BBB, Finance Minister Simeon Dyankov said, quoting a report published by the agency on July 26 2010.

He highlighted that the confirmation comes after five consecutive downgrades for other European countries.

According to the report, "the ratings on the Republic of Bulgaria reflect Standard & Poor's Ratings Services' view of the government's strong track record of appropriate fiscal policy and low gross debt, despite the severe recession; the country's solid growth prospects in the medium term; and its EU membership".

Offsetting these strengths somewhat are large external imbalances and related risks, given the adverse economic backdrop. We think these are bound to continue in 2010 and 2011, the report added.

S&P was also downbeat about Bulgaria’s economic growth prospects, expecting GDP to shrink by one per cent in 2010. The World Bank has projected 0.2 per cent expansion, while the Bulgarian Ministry of Finance (MoF) pegs the expected increase at one per cent.

"With exports seen at 53 per cent of GDP for the year, Bulgaria clearly has the capacity to reorient and react to external conditions unlike with other countries in the region such as Romania, where exports account for 22 per cent of GDP, and Greece with a share of exports in GDP of some 20 per cent," Dyankov said. "The thesis is reinforced that the way out of the crisis is reorientation of exports," he added.

On the negative side, S&P criticises the Bulgarian Government for the slow pace of reforms in health care and education, the Ministry of Finance said, pledging to publish the report on its website.

S&P expects Bulgaria’s government debt will climb by 3.7 percentage points in 2010 from 14.8 per cent at the end of 2009, which means more than 2.2 billion leva in real terms. This estimate matches plans by the government to attract foreign debt of up to 1.94 billion leva in order to plug this year’s deficit, a move approved in early July as part of the 2010 Budget Update.

Source: Dnevnik.bg

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