We expect the Russia-Ukraine military conflict will inflict a stagflationary shock on Bulgaria and we have consequently lowered our forecasts for real GDP growth for 2022 to 1.6% from 4.3% and doubled our estimate for government fiscal deficits to 5% of GDP. However, we believe Bulgaria's strong external and public balance sheets will help mitigate this shock, while the steady inflows of EU transfers will support growth over the medium term. We have affirmed our 'BBB/A-2' sovereign credit ratings on Bulgaria and maintained the stable outlook. On May 27, 2022, S&P Global Ratings affirmed its 'BBB/A-2' long- and short-term foreign and local currency sovereign credit ratings on Bulgaria. The outlook is stable. The stable outlook reflects our expectation that Bulgaria's
