Research Update: Bulgaria Outlook Revised To Positive From Stable On Prospects Of Eurozone Accession; 'BBB/A-2' Ratings Affirmed

Since its formation in June, Bulgaria's new government is progressing with eurozone accession at the beginning of 2025. High inflation levels mean that the country will likely miss the thresholds implied by the price stability criterion (one of the "convergence criteria" Bulgaria technically needs to fulfill to join the eurozone), but we think there could be room for political compromise on this requirement. At the same time, the country's real growth outlook from 2024 on looks robust, averaging 3% over the next few years; this will support government finances and we think deficits will remain below 3% through 2026. We revised our outlook to positive from stable and affirmed our 'BBB/A-2' sovereign credit ratings on Bulgaria. On Nov. 24, 2023,

...- Since its formation in June, Bulgaria's new government is progressing with eurozone accession at the beginning of 2025. - High inflation levels mean that the country will likely miss the thresholds implied by the price stability criterion (one of the "convergence criteria" Bulgaria technically needs to fulfill to join the eurozone), but we think there could be room for political compromise on this requirement. - At the same time, the country's real growth outlook from 2024 on looks robust, averaging 3% over the next few years; this will support government finances and we think deficits will remain below 3% through 2026. - We revised our outlook to positive from stable and affirmed our '###/A-2' sovereign credit ratings on Bulgaria....

Research Update