Standard & Poor’s Agency Revised Bulgaria’s Outlook to Positive
One of the three leading rating agencies in the world, Standard & Poor’s Rating Services, revised Bulgaria’s outlook in terms of foreign and local currency from stable to positive.
The agency affirmed the BBB- long-term and the A-3 short-term local currency sovereign credit rating.
The revision of the outlook is based on the expected robust economic growth of Bulgaria, as well as on the debt reduction that is proceeding faster than previously expected. At the same time external liquidity has improved, says the credit rating agency. According to the press release of the Standard & Poor’s, the country’s accession process to the EU goes according to plan – 2007 which will stabilize structure reforms.
Bulgaria’s positive outlook is backed by competitiveness and political commitment to follow a reasonable macroeconomic policy. By the end of the decade, the GDP is expected to be about 5% annually, says the agency.
Buoyant revenues have led to a general government surplus approaching 1% of GDP. Conservative revenue estimates in the 2005 election-year budget are likely to lead to a balanced budget, notwithstanding politically driven pressures for extra spending, says Standard & Poor’s. General government debt has fallen fast, and this decline was further accelerated by the weaker U.S. dollar and buy-backs of Brady bonds in 2004 and 2005. Accordingly,the debt ratio will fall further to 30% of GDP in 2005,from 80% as recently as 2000, say analysts.
The central bank has more than doubled foreign exchange reserves since 2002, to an estimated $10 billion by year-end 2004, but about one-half of this sum is needed to back the currency board.
The current account deficit may be a cause for concern if there is a change in the rise of the FDI (Foreign Direct Investment). Now the current account deficit covers almost the net FDI, of which only a small amount come from privatization.
The positive out look corresponds to the expection that prudent fiscal policies will survive the June 2005 general election, irrespective of the composition of the next government, because policy constraints imposed by Bulgaria's currency board are well understood in all the main political camps. The consensus surrounding sound economic policies more than outweighs the volatile political landscape. A successful continuation of the public debt reduction strategy while safeguarding external sustainability will lead to a rise in the rating over the next 12 months.
Since the beginning of the government’s mandate, Bulgaria’ rating has risen 15 times according to world rating agencies. In 2004, Standard & Poor’s, Fitch, Moody’s and Japan Credit Rating Agency measured an increase in the rating. It marks the economic prospects and the consistent policy of Simeon Saxe-Coburg’s government.
On 24 June 2004 Standar&Poor’s raised the foreign currency rating up to investment class BBB-/A-3 with a stable outlook. This is a signal for investors that Bulgaria enjoys a stable economic growth and is a promising country for their business activity. Within a week, in the beginning of August, the country’s rating was raised by Fitch and Japan Credit Rating Agency. On 4 August, Fitch assessed Bulgaria’s foreign currency investment rating as BBB, and on 11 August Japan Credit rating Agency gave an evaluation of BBB-/positive outlook in foreign currency.
On 17 November 2004, Moody’s raised the country’s foreign currency bonds rating from Ba2 to Ba1. Bulgaria’s rating in foreign currency bank deposits was revised from Ba3 to Ba1. The outlook is positive.
One of the three leading rating agencies in the world, Standard & Poor’s Rating Services, revised Bulgaria’s outlook in terms of foreign and local currency from stable to positive.
The agency affirmed the BBB- long-term and the A-3 short-term local currency sovereign credit rating.
The revision of the outlook is based on the expected robust economic growth of Bulgaria, as well as on the debt reduction that is proceeding faster than previously expected. At the same time external liquidity has improved, says the credit rating agency. According to the press release of the Standard & Poor’s, the country’s accession process to the EU goes according to plan – 2007 which will stabilize structure reforms.
Bulgaria’s positive outlook is backed by competitiveness and political commitment to follow a reasonable macroeconomic policy. By the end of the decade, the GDP is expected to be about 5% annually, says the agency.
Buoyant revenues have led to a general government surplus approaching 1% of GDP. Conservative revenue estimates in the 2005 election-year budget are likely to lead to a balanced budget, notwithstanding politically driven pressures for extra spending, says Standard & Poor’s. General government debt has fallen fast, and this decline was further accelerated by the weaker U.S. dollar and buy-backs of Brady bonds in 2004 and 2005. Accordingly,the debt ratio will fall further to 30% of GDP in 2005,from 80% as recently as 2000, say analysts.
The central bank has more than doubled foreign exchange reserves since 2002, to an estimated $10 billion by year-end 2004, but about one-half of this sum is needed to back the currency board.
The current account deficit may be a cause for concern if there is a change in the rise of the FDI (Foreign Direct Investment). Now the current account deficit covers almost the net FDI, of which only a small amount come from privatization.
The positive out look corresponds to the expection that prudent fiscal policies will survive the June 2005 general election, irrespective of the composition of the next government, because policy constraints imposed by Bulgaria's currency board are well understood in all the main political camps. The consensus surrounding sound economic policies more than outweighs the volatile political landscape. A successful continuation of the public debt reduction strategy while safeguarding external sustainability will lead to a rise in the rating over the next 12 months.
Since the beginning of the government’s mandate, Bulgaria’ rating has risen 15 times according to world rating agencies. In 2004, Standard & Poor’s, Fitch, Moody’s and Japan Credit Rating Agency measured an increase in the rating. It marks the economic prospects and the consistent policy of Simeon Saxe-Coburg’s government.
On 24 June 2004 Standar&Poor’s raised the foreign currency rating up to investment class BBB-/A-3 with a stable outlook. This is a signal for investors that Bulgaria enjoys a stable economic growth and is a promising country for their business activity. Within a week, in the beginning of August, the country’s rating was raised by Fitch and Japan Credit Rating Agency. On 4 August, Fitch assessed Bulgaria’s foreign currency investment rating as BBB, and on 11 August Japan Credit rating Agency gave an evaluation of BBB-/positive outlook in foreign currency.
On 17 November 2004, Moody’s raised the country’s foreign currency bonds rating from Ba2 to Ba1. Bulgaria’s rating in foreign currency bank deposits was revised from Ba3 to Ba1. The outlook is positive.
