Bulgaria

The stable outlook reflects Moody's expectation that Bulgaria's key credit metrics for economic and fiscal strength are unlikely to significantly change over ...

For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on Alternatively, please see the Rating Methodologies page on [https://ratings.moodys.com](https://ratings.moodys.com) for a copy of this methodology. However, weaknesses with regard to control of corruption and the rule of law remain a weakness and a constraint on the credit profile. Conversely, a more protracted delay or evidence of more fundamental political or economic obstacles to completing the process of euro adoption could be detrimental to Moody's assessment of the strength of Bulgaria's institutions and governance. The stable outlook reflects Moody's expectation that Bulgaria's key credit metrics for economic and fiscal strength are unlikely to significantly change over the coming 12 to 18 months, with the economy returning to pre-pandemic growth levels in 2024 and the government debt burden remaining very low relative to rating peers. Over the longer term, euro adoption will also support economic strength through deeper economic integration with the euro area and also provide evidence of the strength of institutions and governance in steering the country into the euro. However, Bulgaria's caretaker government currently operates under a prolongation of the 2022 budget, which, together with the need for Bulgaria to hold its deficit below 3% of GDP to meet the euro area convergence criteria, leads Moody's to expect that the headline deficit will remain broadly stable around 3% of GDP also in 2023 and 2024. Most notably, the EC and ECB judged that Bulgaria did not yet meet the price stability criterion, which requires the country's average 12-month rate of inflation to be in line with that of the three best performing member states in terms of price stability in the EU. The European energy crisis and the broader economic fallout from the Russian invasion of Ukraine represents a significant economic shock to Bulgaria and its main European trading partners. The stable outlook reflects Moody's expectation that Bulgaria's key credit metrics for economic and fiscal strength are unlikely to significantly change over the coming 12 to 18 months.