The international credit rating agencies Standard & Poors and Fitch Ratings affirmed Bulgaria's credit rating, the Ministry of Finance announced. That country's ratings remain not so attractive for the foreign investors. Fitch Ratings has affirmed Bulgaria's long-term Foreign Currency Issuer Default Rating at BBB- and the long-term Local Currency Issuer Default Rating at BBB with stable perspective. That rating does not offer attractive conditions to the large international investment and pension funds, which are usually among the biggest buyers of government bonds. This applies to the evaluation made by the other rating agency Standard & Poors BB+/B with stable outlook.

Practically it means that when the Bulgarian cabinet decides to borrow a state loan from the international financial markets, the possible buyers of Bulgarian debt (government bonds) are looking for an advice and recommendations from the international rating agencies. Depending on their evaluations, the foreign investors decide whether to buy Bulgarian bonds or not. They also calculate the interest rate on the money borrowed to Bulgaria. The lower the credit rating of a given country, the higher the interest rate levied on the unsecured loan.

From this point of view, Bulgaria received quite modest and cautious evaluations by the international credit agencies. It is not viewed as a high-risk country, yet it is not recommended to foreign investors as a country with the best quality of state bonds, unlike the ones evaluated with A, AA, or AAA for instance. However, the amount of spare money worldwide is huge and investors do not miss even the smallest opportunity to earn some profit. In other words, many investors choose to buy state bonds of B type. That is why Bulgaria issued recently a new loan to the tune of EUR 2 billion on the international financial markets and is to pay a very reasonable interest rate of around 2% only.

The evaluations of the international credit rating agencies about the attractiveness, profitability and the security of the money invested in government bonds are always accompanied with analyses about the economic situation in the country subject to those credit evaluations. Fitch Ratings and Standard & Poors pointed out that Bulgaria's economy had a series of advantages, but at the same time they did not miss to mention the weaknesses of the country's economy. Both rating agencies published quite cautious and modest forecasts. They predict that Bulgaria's gross domestic product would increase with nearly 2% in 2016. However, the forecasted increase of the country's GDP is quite insufficient, because Bulgaria has been lagging behind other EU members and needs a much higher economic growth, in order to reach the EU average.

The World Bank is far more optimistic about Bulgaria's economy. Its representative in Bulgaria Tony Thompson believes that there is huge unused potential in the Bulgarian economy and if this country manages to take advantage of that potential, its GDP may grow even with 4% on an annual basis.

However, economists share different opinions about the state of the Bulgarian economy and its growth potential. Currently, most of them are moderate optimists, because the Bulgarian authorities also assume that the economic growth would be closer to the one forecasted by the international credit rating agencies, than to the World Bank's forecast of 4%. Bulgaria's Premier Boyko Borissov was even more optimistic and voiced hopes that Bulgaria's economy would mark a 4.5% increase year on year.

English version: Kostadin Atanasov