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Bulgaria has taken a firm stance against the recent Russian presidential elections held in the illegally occupied territories of Ukraine
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Standard and Poor’s maintains its stable outlook on Bulgaria’s sovereign credit rating and will publish a rating update on December 12, a senior S&P official has said.
According to Marcin Petrykowski, Standard & Poor’s Regional Head for Central and Eastern Europe and Managing Director of the Poland office, nothing has changed since the last update was published on June 13 and Bulgaria’s rating stands at ‘BBB‘, one step above junk.
In June, S&P lowered Bulgaria’s long-term sovereign rating one notch to BBB- from BBB, with stable outlook, citing political volatility that posed risks to much-needed reforms.
In an interview with investor.bg published in Bulgarian on Tuesday, Petrykowski pointed to three key factors for a potential rating downgrade in December: high indebtedness of state-owned companies and state interference in the energy, transport and banking sectors which could prove additional burden on the state budget; slowdown of economic growth or existence of risks to growth; and last but not least – opaque political decisions.
S&P maintains its relatively positive assessment of Bulgaria’s banking sector despite the liquidity problems experienced by First Investment Bank and Corporate Commercial Bank (KTB) during the summer, said Petrykowski, adding the sector, which is about 70% foreign-owned, is highly liquid.
He went on to say that several days ago S&P had affirmed its assessment of Bulgaria’s banking sector at 7 on the rating agency’s ten-degree Banking Industry Credit Risk Assessment (BICRA) scale.
In Europe, Switzerland’s banking system tops the ranking as the least risky, while Belarus is ranked at the lowest position with risk score of 10. In the region of Central and Eastern Europe, Poland’s banking system has risk score of 5, Romania is at par with Bulgaria, while the Czech Republic has risk score of 4.
However, the problem with KTB remains unresolved and depositors still have no access to their money. According to Petrykowski, time will show in what context the KTB problem will be situated in December and what its potential impact on Bulgaria’s credit rating will be.
Bulgaria’s economy will expand by 1.4% this year and 1.8% next year, Petrykowski added. Even though the figures are below S&P’s growth projections for Poland (3.1% in 2014 and 3.4% in 2015), Bulgaria has laid the basis for sustained growth and now the country should find ways to stimulate economic expansion.
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