Moody's keeps Bulgaria at Ваа3, outlook "positive"

Moody's keeps Bulgaria at Ваа3, outlook "positive"

Moody's has confirmed Bulgaria's Ваа3 credit rating with a "positive" outlook, the country's finance minister Simeon Djankov said during a joint conference with interior minister Tsvetan Tsvetanov.

The agency considers that Bulgaria is likely to restore its economic growth next year, but the outcome will mainly hinge on the state's capacity to absorb EU funds, according to a media statement published on the Finance Ministry's website on December 22.

Moody's also evaluates the country's prudent fiscal policy, low state debt and the maintenance of substantial fiscal reserves.

"Taking into account the ratio of general government debt to GDP of 14%, Bulgaria is the third least indebted country in the EU after Estonia and Luxembourg," according to the statement.

A prerequisite for a positive rating action would be considered the continuation of reforms, an improvement in budgetary procedure transparency and a sustained recovery of economic growth.

"In 2010, the current account deficit was transformed into a small surplus in the January-October period as a result of the reduction of trade deficit by half and the increase in the services account. The balance of payments ended in deficit due to the decline in foreign direct investments and other capital flows on one hand and large foreign debt repayments on the other. Given the external factors and the lack of flexibility brought by the currency board, a contraction in the current account deficit is an important factor for a long-term stability," the agency noted.

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