January 22 (BTA) - Fitch Ratings has affirmed Bulgaria's
long-term foreign-currency Issuer Default Rating (IDR) at BBB
with a positive outlook, the Ministry of Finance said on
Saturday.  

Bulgaria's ratings balance its strong external and public
balance sheets and credible policy framework, underpinned by EU
membership and a long-standing currency-board arrangement,
against weak potential growth, partly due to unfavourable
demographics, which could weigh on government finances over the
long term. Governance indicators have fallen below peers,
Fitch's commentary reads.   

The Positive Outlook reflects the prospect of euro adoption,
which would lead to significant improvements in external
metrics. In Fitch's view, short-term downside risks tied to the
coronavirus pandemic have eased and are more than offset by
prospects of substantial EU funding for investment and a broad
commitment to macro and fiscal stability (anchored by the
inclusion since July 2020 of the Bulgarian lev into Exchange
Rate Mechanism II).   

According to Fitch Ratings, the formation of a four-party
coalition government in December 2021 has significantly reduced
near-term political uncertainty following a succession of
inconclusive elections last year.       

Fitch maintains its view that economic prospects will be
favourable over the next years, supported by substantial EU
funding (for a total of around 36 per cent of GDP in 2021 prices
 in 2022-27). Fitch Ratings forecasts GDP growth of 3.7 per cent
 in 2022, accelerating to 4.5 per cent in 2023, and average
inflation rising to 5.2 per cent in 2022.    

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