Sofia Deputy Mayor: Rating Outlook Downgrade Will Hit Municipalities
Doncho Barbalov, Deputy Sofia Mayor in charge of finance, has cautioned that Bulgaria's rating outlook downgrade will hit municipalities.
Speaking Sunday at a seminar of the Sofia Municipal Council in Pravets, he explained the anticipated negative impact with the fact that estimate of the condition of any Bulgarian municipality could not be better than the rating of the country.
On Friday, international rating agency Standard and Poor's affirmed its 'BBB/A-2' long- and short-term sovereign credit ratings but it revised its outlook for Bulgaria from stable to negative, citing weak bank lending, low economic growth, high unemployment and political instability.
"If the trend for the country persists, it will gradually drag down all others," Barbalov warned, as cited by mediapool.bg.
He noted that Bulgaria's latest downgrade dated back to the autumn of 2008, when Sofia's outlook had been lower than that of Bulgaria.
He reminded, however, that Bulgaria's current outlook was worse than that of its capital.
Barbalov also cautioned that the downgrade would also have a negative impact on businesses because it would result in an increase in the cost of loans.
Sofia's Deputy Mayor in charge of finance suggested that "a negative trend will make investors more cautious, which is bad."
Sofia Mayor Yordanka Fandakova also said that she was deeply worried by the revised outlook.
She assured, however, that the Sofia Municipality would keep managing its finances as it had done before in a bid to not place a burden on the budget.
In 2014, the Sofia Municipality will have over BGN 1.421 B to spend, up by BGN 230 M from the previous year, the first budget increase in three years.
Sofia municipal councilor Elen Gerdzhikov noted that the record-high budget was due to EU funding, not to increased local fees and taxes.
Fandakova assured Sunday that the rates of local taxes and fees in Sofia would not increase in 2014.
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