Bulgaria's Baa2 government bond rating and stable outlook reflect the country's moderate economic and institutional strength and high government financial strength, which contribute to its moderate susceptibility to event risk, global rating agency Moody's said in its annual credit report.
Moody's report is an annual update to the markets and does not constitute a rating action.
"The moderate assessment of economic strength reflects a mid-sized economy of approximately $54 billion and average incomes that are in the very middle of incomes globally, plus an increasing diversification of economic activity," the agency said.
Moody's sees Bulgaria's institutional strength as moderate, as its capacity was strengthened in the process of EU accession. However, the country needs to further tackle corruption, it added. The rating agency considers the government's financial strength to be high based on its healthy finances, with low debt compared with its peers in the euro area.
However, Moody's highlighted the still-high unemployment rate, anaemic expansion in industrial output and the subdued import demand as obstacles that the government will face in achieving the budget gap of 1.6% of the gross domestic product (GDP) it forecasted for 2012. Moody's sees Bulgaria's deficit at 2% of GDP.