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Standard & Poor's Downgrades Bulgaria Ratings

Business » FINANCE | December 13, 2013, Friday // 14:26| Views: 1668 | Comments: 6
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Standard & Poor's Downgrades Bulgaria Ratings: Standard & Poor's Downgrades Bulgaria Ratings File photo

Standard & Poor's ratings agency has affirmed its long- and short-term foreign and local currency sovereign credit ratings on Bulgaria at 'BBB/A-2'.

The outlook on Bulgaria's credit ratings has been downgraded from 'stable' to 'negative', citing weak economic growth prospects and a worrying political situation.

In a statement, S&P said the 'negative' outlook indicated that there was at least a one-in-three possibility of lowering the ratings within the next two years, if the political environment deteriorates, weighing on already-weak growth prospects.

According to the rating agency, Bulgaria's growth prospects are being challenged by anemic domestic demand, resulting from low credit growth, constrained investment growth and still-high unemployment, as well as by the complex political climate, which could slow reforms.

S&P agency stated that the GDP actual growth for the period 2010-2012 (approximately 1%) was affecting the outlook downgrading thus preventing the country's development prospects.

Bulgarian Ministry of Finance agreed with S&P's assessment of the deteriorating business environment and the suppressed economic growth for the period 2010-2012, yet dismissed the negative growth prospects pointing out the GDP growth of 1.5% in Q3.

The Ministry of Finance's position is supported by short-term indicators which also show growth. The retail sales growth reached 6.9% in October. The industrial production index is also positive for the second consecutive month, owing to increased domestic trade.

S&P's report notes that the improvement of Bulgarian political climate would strengthen the institutions functions and would increase the economic growth prospects, which, in turn, would have a favorable impact on the country's credit rating.

The credit rating agency stated that the budget deficit is expected to reach 2% of GDP in 2013, as a result of government commitments to increase social benefits and pensions, and to settle obligations to the private sector.

The agency also noted that the level of net government debt was expected to remain low amounting to 15% of GDP in 2016. S&P confirmed the government's ability to meet deficit targets for the period 2014-2016.

The evaluation of the ability to maintain the stability of public finances is an essential for the credit rating and it has been validated.

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» To the forumComments (6)
Agent Piccadilly - 15 Dec 2013 // 12:12:35

It is obvious that S&P are puppets of GERB and are paid to say whatever GERB tell them. Otherwise, why didnt S&P downgrade Bulgaria whilst the GERB government were in power during the biggest recession the world has seen, but instead wait until the BSP are in power and the recession is over?

countryhick1 - 15 Dec 2013 // 10:19:55

Agent Piccadilly
WTF are you talking about you stupid person

peterperfect - 15 Dec 2013 // 09:52:27

Agent, you are totally deluded I'm not even sure if the experts who compiled the report have ever even heard of GERB!!!! If you are a typical example of a BSP supporter then heaven help us. Use this report, compiled by hard nosed economists to help you recover Bulgaria, bury your head in the sand and we sink even further.

PICCUROWNDILLY - 14 Dec 2013 // 11:07:07

Can I have your address ??? I want to get some of that stuff you are smoking !!! Talk about hallucinations, as if GERB has any contact whatsoever to S&P.... You are good for a laugh however, must be your sole purpose in life.

Agent Piccadilly - 14 Dec 2013 // 09:45:14

S&P are GERB puppets. One has to only travel around the country and witness the massive increases in infrastructure investments, wages and new jobs to realize this. The Bulgarian oeople know the BSP always deliver on their promises and the sooner our country becomes a revolutionary one party state the better for everyone!

peterperfect - 14 Dec 2013 // 08:42:44

So now we see the effect of the current situation. The governments refusal to either enter meaningful talks with the demonstrators leading to a resolution or, stepping down and calling fresh elections has led to this. Shameful.

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