FT: Bulgarian Economy May be Approaching Normality

Views on BG | February 2, 2015, Monday // 12:50
Bulgaria: FT: Bulgarian Economy May be Approaching Normality File photo

Politics and economy in Bulgaria “may be getting back to something approaching normality in 2015” after two difficult years, the Financial Times has opined.

Its article comes amid last week's reports that Sofia is planning to raise close to BGN 6.9 B on government bonds this year.

The policy will be implemented as a mechanism for bringing the budget deficit closer to the goal of 3% of GDP. This is in fact one of the requirements for the initial stage of accession to the Eurozone.

Goranov has mentioned 2018 as a possible date for completing the first step – accession to the European Exchange Rate Mechanism II (ERM II).

Meanwhile, Bulgaria's credit rating was dropped to the ''junk'' category at the end of 2014 in the Standard and Poor's annual report. Some of the main reasons include the bank crisis involving Bulgaria's Corpbank and the political instability over the past one year. Thus, foreign investors in Bulgaria remain wary.

Fitch, on the other hand, published its estimation of foreign and local currency ratings - BBB- and BBB respectively, thus prognosing a relative stability in the country after the Parliamentary elections of October 2014.

“Many of Bulgaria’s underlying weaknesses have been exposed over the past several months even though the country’s low level of public indebtedness sets it apart from some of its more fiscally challenged CEE peers,'' said Nicholas Spiro of consultancy Spiro Sovereign Strategy.'' Growth remains lacklustre and the budget deficit has deteriorated significantly over the past year – albeit from a relatively strong position.”

An anonymous, pro-government source has affirmed the Bulgarian government's efforts and has noted that some reforms ''are already under way in health, justice and education, without any sign of social discontent.”

The energy sector was pointed out as an important area that still needs a lot of work.

Daniel Smilov, programme director at the Centre for Liberal Strategies, praised Bulgaria's ruling coalition when it comes to reforms in the judiciary and stabilization of the banking sector. He however, pointed out that there needs to be a detailed plan for improving the energy sector in the country and no such has been announced yet.

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Tags: Financial Times, government bonds, Bulgaria, Eurozone, ERM II
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