Fitch Raises Bulgaria's Rating Outlook to Positive Amid Reduced Political Uncertainty

Fitch Ratings has revised Bulgaria's credit rating outlook to positive from stable and maintained its BBB+ rating. The decision reflects reduced political uncertainty but comes with warnings about growing macroeconomic imbalances, high inflation, and a widening budget deficit.

The agency linked the change to the April parliamentary elections and the formation of a single-party government with a parliamentary majority, which 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 in the European Union and the euro area, as well as strong public finance and external balance indicators. However, these strengths are offset by risks of economic overheating, pro-cyclical fiscal policy, high inflation, a current account deficit, and weaker governance indicators compared to 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 to its March assessment. The agency expects growth to slow to 2.4% in 2028, with average annual inflation expected to be 3.5%.