Fitch Agency Has Confirmed Bulgaria's BBB Rating with a Stable Outlook

Fitch Ratings has upgraded Bulgaria's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'BBB' from 'BBB-'. The Outlooks are Stable, quoted by Reuters. 

A full list of rating actions is at the end of this rating action commentary. KEY RATING DRIVERS The upgrade of Bulgaria's IDRs reflects the following key rating drivers and their relative weights: High A prolonged decline in external debt ratios has led Bulgaria's external finance metrics to outperform the majority of its 'BBB' peers. Including data revisions, Bulgaria's net external creditor position strengthened to 8.6% of GDP in 2016 from a net debtor position of 2.1% of GDP in 2015. Bulgaria's net creditor position is forecast to strengthen further, staying above the 'BBB' median net creditor position of 0.8% of GDP.

Current account surpluses averaging 3.4% of GDP are also forecast for 2017-2019, supported by gains in export competitiveness and a diversifying export base. This compares with the 'BBB' median current account deficit of 1.2% of GDP. Bulgaria's sovereign external buffer continues to strengthen as reserves climb. Foreign reserves represent 49.7% of GDP, equivalent to 10 months of imports. An external liquidity ratio of 215% (end-2016) provides more than adequate liquidity support for Bulgaria's long-standing and credible currency board regime.

Medium Budget outturns are stronger than peers. Compared with the previous forecast for a deficit of 0.6% of GDP, Fitch now forecasts the general government budget to balance in 2017, as was the case in 2016. For 2018-2019, budget measures that will increase spending on pensions, salaries, defense and social welfare will result in small fiscal deficits, but primary fiscal surpluses will be maintained.

General...