November 30, 2019 / 2:02 PM / 12 days ago

Bulgarian PM says S&P rating hike reflects efforts to improve finances

FILE PHOTO: Bulgarian Prime Minister Boyko Borissov arrives for the second day of the European Union leaders summit dominated by Brexit, in Brussels, Belgium October 18, 2019. REUTERS/Piroschka van de Wouw/File Photo

SOFIA (Reuters) - Bulgarian Prime Minister Boyko Borissov said on Saturday S&P Global Ratings’ decision to raise its long-term foreign currency rating for the Balkan state to BBB/A-2 from BBB-/A-3 reflected the government’s efforts to improve its finances.

S&P Global Ratings cited the Balkan state’s strong fiscal performance and progress toward entering the Exchange Rate Mechanism II that could set the country on its way to adopting the euro as its currency.

“We expect Bulgaria’s economy to grow resiliently and post strong fiscal results,” S&P said. It now expects the economy to grow 3.6% this year, slightly more than its previous forecast, reflecting strong private consumption.

“Bulgaria’s economy is growing without building macroeconomic imbalances, its fiscal and external balance sheets are strong, and progress on entering the Exchange Rate Mechanism II (ERM II) is steadfast.” S&P said.

The small and open economy hopes to join the two-year ERM-II by next April and to balance its finances in 2020.

“Bulgaria’s upgraded credit rating is another good expert assessment of the policies we are pursuing in the areas of the economy and finance,” Borissov said on Saturday.

Sofia is targeting a one-off budget deficit of 2.1% of economic output this year, mainly due to a $1.26 billion fighter jet deal it signed with the United States and planned larger spending in December.

Reporting by Angel Krasimirov; Editing by Hugh Lawson

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