We consider that continued domestic political uncertainty after Bulgaria's October 2022 snap election and elevated inflation could pose challenges to or delay the country's eurozone accession. In our view, Bulgaria's successful accession to the eurozone would eliminate residual euro exchange rate risks in its economy, improve the country's access to euro capital markets, and grant domestic banks direct access to the European Central Bank (ECB). We expect Bulgaria's growth will decelerate significantly to 0.8% in 2023 from a stronger-than-anticipated 3.0% in 2022. At under 20% of GDP, Bulgaria's net general government debt is low in a global comparison while interest expenditures also remain low, affording Bulgaria a policy buffer against significantly weaker global economic conditions. We have affirmed our 'BBB/A-2'
