The international rating agency S&P Global Ratings confirmed the long-term and short-term credit rating of Bulgaria in foreign and local currency 'BBB/A-2'. The outlook for the rating remains positive.
S&P Global Ratings notes that if a stable government is formed quickly after the June elections and a prolonged period of instability such as that experienced in 2021-2023 is avoided, there is not expected to be a significant delay in the country's accession to the eurozone. Bulgaria still does not meet the price stability criterion of the convergence criteria that all countries must meet before joining. The rating agency believes that even if Bulgaria does not join the eurozone in 2025, this will probably be postponed only until January 1, 2026.
Despite the aging and reduction of the working-age population, S&P Global Ratings believe that Bulgaria's economy has strong prospects for growth in the next few years. They forecast real GDP growth of just under 3% on average over 2025-2027, supported mostly by increased domestic demand. Consumption will remain strong amid a resilient labor market with near-record low unemployment and positive real wage growth. At the same time, sufficient funds from the EU will support investment activity for several years. The rating agency estimates the available grants and loans for Bulgaria under the Multiannual Financial Framework (MFF) of the EU for the period 2021-2027 and Next Generation EU (NGEU) to be significant - about 29% of the estimated GDP for 2024.
Bulgaria has one of the best fiscal results of the countries in Central and Eastern Europe and the rating agency estimates that current fiscal plans will lead to deficits below 3% of GDP by 2027, keeping debt, net of liquid government assets, around 20% of GDP by 2027. Similarly, S&P Global Ratings expects the current account deficit to remain at an average of 1% of GDP and to be overfinanced by EU funds and foreign direct investment inflows.
S&P Global Ratings report that they may raise the rating in the next two years, potentially by several notches, if Bulgaria becomes a member of the Eurozone.
S&P Global Ratings would revise the outlook to stable if the prospect of Bulgaria joining the eurozone becomes less likely.
You can read the full content of the S&P Global Ratings press release, here.