Standard & Poor's Ratings Service confirmed its long- and short-term foreign and local currency sovereign credit ratings on Bulgaria at 'BBB/A-3' with a stable outlook.

"The ratings on Bulgaria reflect our view of the government's strong track record of appropriate fiscal policy and low gross and net general government debt," the rating agency said in a statement.

According to the agency the country enjoys solid medium-term growth prospects despite the expected slowdown in 2012, particularly if backed by improving absorption of EU funds and other benefits stemming from EU membership.

S&P expects Bulgaria's economic recovery "to lose steam in 2012, and growth to decline to 1.5%, from around 2.0% in 2011, reflecting a general economic slowdown in Bulgaria's main trading partners, coupled with ongoing banking-sector deleveraging in the home countries of Bulgaria's foreign-owned banks".

The current account is forecast to move to positive territory, from a deficit of around 23% of GDP in 2008, implying a gradual reduction of external debt to around 53% of GDP in 2012 from 69% of GDP in 2009.

As a result of ongoing budget deficit reduction, the agency expects general government debt will reach 17.7% of GDP in 2012, up from 13.7% in 2008.

The stable outlook reflects S&P analysts view that Bulgaria's authorities will continue to maintain a favorable fiscal position on the back of ongoing budgetary consolidation and structural reforms, despite the likely slowdown in economic growth prospects and against its gross external debt position.

Bulgaria's sovereign debt is rated Baa2 by Moody's and BBB- by Fitch Ratings.

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