Bulgaria's current account gap soared to 21.6 per cent of gross domestic product (GDP) in 2007, beating all analysts and government forecasts, according to preliminary data published by the Bulgarian National Bank (BNB).

Recently, Fitch credit rating agency downgraded Bulgaria's sovereign credit rating outlook from stable to negative, forecasting the current account deficit at 19.5 per cent in 2007. The credit rating agency noted the large gap as one a particularly troublesome macroeconomic parameter.

In nominal terms, the deficit came in at 3.935 billion euro, an increase of 57 per cent on the year. The rising gap was mainly attributable to the negative trade balance, which stood at 1.857 billion euro.

Local analysts, however, did not sound an alarm over the BNB figure. Speaking to Dnevnik daily, they said the disbalance posed no risk to the Bulgarian economy because it had many cushions and tools to counteract to external shocks.

Bulgarian Finance Minister Plamen Oresharski also appeared unconcerned. The strict fiscal policy and the growing reserves were a solid buffer against external risks, the minister said, as quoted by Dnevnik daily. He attributed the soaring deficit to the fast GDP growth rate and increasing domestic consumption.

Georgi Angelov, chief economist at Open Society Institute, told SeeNews he was not so much surprised by the deficit, as he was from the all-time high foreign direct investment (FDI) flow. Last year, the volume of FDI reached 5.687 billion euro, the equivalent of 19.9 per cent of GDP. Nevertheless, for the first time in nine years, the volume of FDI was not sufficient to fully cover the current account deficit. Last year, it covered 92.1 per cent of the current account gap last year, down from 110.9 per cent in 2006.