site.btaMoody's Upgrades Outlook on Bulgaria's Ratings to Positive

August 31 (BTA) - Moody's Investors Service has changed
the outlook on the Government of Bulgaria's ratings to positive
from stable. Concurrently, Moody's has affirmed Bulgaria's
long-term issuer rating in foreign and local currency at Baa2,
the Finance Ministry reported on Saturday.

Moody's said the positive change reflects the country's
strengthening fiscal metrics and growth prospects. The Baa2
rating affirmation balances the positive fiscal and
macroeconomic trends and the country's strong commitment to join
 the euro area against ongoing challenges related to Bulgaria's
worsening demographics and shortcomings in some policy areas.

The rating agency underscored the government's strengthening
fiscal profile, which is due to a consistently prudent policy
stance. Over the last few years, Bulgaria has seen growing
budgetary surpluses, a steady government debt reduction,
significantly improving debt affordability, a sizeable fiscal
reserve account, and a pension reform contributing to fiscal
sustainability. Moody's expects the fiscal balance to remain in
surplus (0.8 per cent of GDP), and public debt to continue its
downward trend and reach 19 per cent of GDP.

According to Moody's, Bulgaria's steady growth prospects will
benefit from ongoing EU integration and the country's increased
competitiveness. With the national economy growing by more than
3 per cent every year since 2015, the agency expects positive
economic growth to continue in the coming years, with real GDP
growth hovering around potential. Growth will be supported by
important infrastructure projects, such as the Hemus and Strouma
 motorways and the Sofia-Plovdiv railway line, as well as higher
 EU funds absorption rates.

Increased competitiveness has been backed by strong performance
of the export sector, which has translated into the current
account figures, with a rising surplus in the service balance
more than offsetting the goods deficit. The turnaround in
current account dynamics reflects the structural improvements in
 the Bulgarian economy since the crisis.

Moody's expects that Bulgaria's simultaneous accession to
Exchange Rate Mechanism II and the Single Supervisory Mechanism
will support sound macroeconomic policies and a further
strengthening of institutions. The action plan to join the two
mechanisms as well as the efforts to deepen Bulgaria's relations
 with the Organization for Economic Cooperation and Development
are expected to promote the adoption of additional reforms in
the areas of corporate governance, budget planning and public
administration efficiency.

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Citing the news about the upgraded outlook on Bulgaria's credit
rating, Prime Minister Boyko Borissov said: "We will certainly
raise incomes in all sectors next year." Borissov said that the
fiscal reserve stands at 12.5 billion leva and the national
budget surplus amounts to 1.1 billion leva. The Prime Minister
was speaking at a meeting of the youth chapter of the ruling
GERB party in Varna, on the Black Sea. RY/VE