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Fitch revises Bulgaria's outlook to positive, affirms 'BBB' rating

Ratings

Fitch Ratings revised the outlook on Bulgaria's long-term foreign-currency issuer default rating (IDR) to positive from stable and affirmed the IDR at 'BBB', reported Bulgarian News Agency (BTA).

Fitch said that the positive outlook reflects the weakening of macroeconomic risks in Bulgaria related to the coronavirus pandemic, a more resilient economy, sound policies and gradual progress towards euro adoption.

According to Fitch's analysts, short-term risks tied to the coronavirus pandemic and an uncertain electoral outcome are largely offset by prospects of substantial funding for investment from the EU and broad commitment to macro and fiscal stability. Fitch pointed out that Bulgaria is set to be one of the main beneficiaries of EU transfers in the coming years, including EUR 16.6 billion (27% of the country's GDP in 2020) in next 2021-27 Multi Annual Framework.

Although there are questions surrounding the capacity of Bulgaria to absorb such a l arge amount of funds, Fitch believes this could lift growth from a projected 3% in 2021 to 4-5% in 2022-25.

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