Moody's Affirms Bulgaria's Baa3 Rating

Moody's Affirms Bulgaria's Baa3 Rating

Moody's Investors Service affirmed Bulgaria's Baa3 issuer rating with positive outlook, the Finance Ministry said Tuesday.

In the Moody's assessment the condition of Bulgaria's public finances is described as average for the European Union.

In January 2010 the outlook was revised to positive from stable, reflecting this country's resilience in the global downturn, the Finance Ministry said.

This rating agency expects Bulgaria's growth to be restored shortly, aided by funding from the EU.

The report identifies as Bulgaria's strengths the membership of the EU (as a source of financial support and incentives for current reforms), a sound fiscal policy, low government debt and experience in maintaining significant fiscal reserves.

A possible upgrade of this country's rating is pegged to fiscal consolidation, improved budget transparency and renewed economic growth. An upgrade would also result from a persistent upward trend in net exports and increase in investments, says Moody's as quoted by the Finance Ministry.

The agency observes that the current account deficit continues to shrink this year, largely due to the relatively large export and much slower increase in imports.

However, considering the external vulnerability and lack of flexibility due to the currency board rules, a decreasing current account decifit is an important element for long-term macroeconomic stability, the analysis says.

Source: BTA

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