Fitch Ratings revised the outlook on Bulgaria’s credit rating to positive from stable and affirmed the country’s BBB+ rating, the Finance Ministry said on Saturday. The decision reflects reduced political uncertainty but is accompanied by warnings of growing macroeconomic imbalances, high inflation and a wider budget deficit.
A positive outlook means that the rating could be upgraded if developments are favourable, but does not guarantee such a move.
Fitch linked the change to the April parliamentary elections and the formation of a single-party government with a parliamentary majority, the first such administration in Bulgaria in more than two decades. According to the agency, this could bring an end to the prolonged period of unstable coalitions and create conditions for structural reforms, higher potential growth and improved governance.
Bulgaria’s rating is supported by its membership of the European Union and the euro area, as well as by strong public finance and external balance indicators. These strengths are, however, offset by risks of economic overheating, pro-cyclical fiscal policy, high inflation, the current account deficit and weaker governance indicators compared with similarly rated countries.
Fitch kept its forecast for Bulgaria’s economic growth in 2026 at 2.8%, while raising its projections for inflation and the budget deficit compared with its March assessment. The growth forecast for 2027 remains at 2.9%, while the agency expects growth to slow to 2.4% in 2028.
A more substantial revision concerns average annual inflation. For 2026, the forecast has been raised from 3.8% to 4.9%, or by 1.1 percentage points. For 2027, the projection has been increased from 3.8% to 4%. Inflation is expected to slow to 3.5% in 2028, but remain above the median for countries in the BBB rating category.
Bulgaria’s economic growth has remained close to 3% since 2024 despite external shocks and weak growth in the EU. Household consumption has been the main driver, while net exports have made a negative contribution. In the coming years, Fitch expects domestic demand growth to slow and exports to improve.
The agency points to signs of macroeconomic imbalances, mainly related to strong nominal wage growth over the past three years. Unit labour costs rose by a cumulative 36.4% in the three years to 2025, about four times the 9% threshold used under the EU’s Macroeconomic Imbalance Procedure.
Income growth is supporting consumption but is also increasing imports, widening the current account deficit. Fitch forecasts the deficit to reach 7.4% of GDP in 2026, significantly above levels in countries with similar credit ratings. The agency also identifies rapid growth in household lending as an additional risk.
The forecast for the 2026 budget deficit has also deteriorated. The comparative table accompanying the assessment puts the deficit at 4.6% of GDP, compared with 3.2% expected in March. The text of the assessment gives a figure of 4.5%. Both estimates are below the government’s target of 5.4% of GDP.
The agency attributes the increase to the lagged effect of earlier spending measures and an expected rise in public investment. The government plans public investment to reach 5.8% of GDP, although Fitch assumes that some municipal capital expenditure will not be implemented.
For 2027, the budget deficit forecast has been improved from 4.3% to 3.8% of GDP. It is expected to narrow further to 3.5% in 2028. Even so, the agency describes fiscal policy in 2026 and 2027 as loose and notes that Bulgaria is under an excessive deficit procedure only a few months after joining the euro area.
Fitch has also raised its government debt forecast. For 2026, the projected debt-to-GDP ratio has been increased from 30.5% to 31.7%, and for 2027 from 31.6% to 32.4%. Debt is expected to reach 34.1% of GDP in 2028. Despite the increase, it remains low compared with other EU countries and peers with similar ratings.
Euro area membership strengthens the banking system through European Central Bank supervision and liquidity mechanisms, the agency said. Banks remain well capitalised, liquid and profitable, although rapid growth in household lending could create risks to asset quality.
Among the factors that could lead to a rating upgrade, Fitch highlights an easing of macroeconomic imbalances, slower wage and credit growth, lower inflation and a narrowing of the current account deficit. Sustained implementation of structural reforms that improve governance and growth potential would also be positive.
Conversely, a deepening of imbalances, a sharp economic slowdown due to a loss of competitiveness, or a significant increase in government debt could lead to negative rating action.
In extraordinary rating actions in July 2025, Fitch and S&P Global Ratings upgraded Bulgaria’s long-term credit rating by one notch to BBB+ with a stable outlook. The main factor was the final approval of Bulgaria’s accession to the euro area from January 1, 2026.
In March 2026, Fitch affirmed Bulgaria’s BBB+ rating with a stable outlook. In May, S&P raised the outlook on Bulgaria’s rating from stable to positive and affirmed its BBB+/A-2 ratings.
Moody’s Ratings keeps Bulgaria’s rating at the comparable Baa1 level with a stable outlook. In its periodic review in January 2026, the agency said the positive effect of euro adoption had already been largely incorporated into the rating.
Fitch Raises Bulgaria’s Rating Outlook to Positive, Affirms BBB+ THE NEWS FROM BULGARIA – NEWS AGENCY 2009-2025 2026-09-26 07:37:53
Latest news World news Country news Most important news latest news most important latest of the day Economic news Bulgaria, Bulgarian economy news, Bulgaria economic news, latest economic news, breaking economic news, Bulgarian business news, Bulgaria business news. Bulgarian financial news, Bulgaria finance news, Bulgarian markets, Bulgaria stock market, Bulgarian banking sector, Bulgarian investments, foreign investment Bulgaria. Bulgaria inflation, Bulgaria GDP, Bulgarian exports, Bulgarian imports, Bulgaria trade, Bulgarian industry, Bulgarian companies, Bulgarian entrepreneurs. Bulgarian business economy, economic growth Bulgaria, Bulgaria economic policy, Bulgarian fiscal policy, Bulgarian monetary policy, Bulgaria budget, Bulgarian public finances. Bulgaria wages, Bulgarian employment, Bulgaria unemployment, Bulgarian labor market, Bulgaria salaries, Bulgarian taxes, Bulgaria taxation, Bulgaria energy market. Bulgaria real estate market, Bulgarian property market, Bulgaria construction sector, Bulgarian tourism economy, Bulgaria agriculture economy, Bulgarian manufacturing, Bulgaria technology sector. Bulgarian startups, Bulgaria investment news, Bulgaria corporate news, Bulgarian financial markets, Bulgaria interest rates, Bulgarian banks, Bulgaria euro adoption, Bulgaria economic reforms.
BULGARIA NEWS – NEWS AGENCY 2009–2026 2026-09-26 07:37:53