The change in the outlook on Bulgaria’s credit rating from positive to stable triggered strong political reactions and became part of the dispute surrounding the draft budget for 2027. Standard & Poor’s affirmed the country’s long-term and short-term ratings at BBB+/A-2, but warned of a deterioration in budgetary and external indicators.
According to the agency, Bulgaria’s budget deficit is expected to reach 5.1% of GDP in 2026. The current account deficit is forecast at 8.7% of GDP, driven by weak exports, strong domestic demand and increased imports. S&P expects economic growth to reach 2.8% in 2026 and average 2.6% annually over the 2027–2029 period.
GERB warns of another downgrade
GERB described the decision as a signal to the government to limit the budget deficit and accelerate consolidation. Former Finance Minister Vladislav Goranov said that the agency had changed the outlook just a few months after raising it in May.
Temenuzhka Petkova warned that, in the absence of swift measures, the credit rating itself could also be downgraded. According to GERB, the draft budget does not offer sufficient reforms, while cutting capital expenditure does not constitute lasting fiscal consolidation. The party said that S&P’s assessment would be at the heart of the debate during the first reading of the 2027 budget.
DB calls for a budget deficit below 3%
“Democratic Bulgaria” linked the change in the outlook to the cabinet’s fiscal policy. The coalition said that the expected reforms had not been implemented, spending and debt were rising, and the economy was losing competitiveness.
DB insisted that the draft budget for 2027 be revised so that the deficit would be below 3% of GDP. According to the formation, this would limit the risk of losing growth and slipping into recession.
Government rejects claims of a downgraded rating
Todor Dzhikov of “Progressive Bulgaria” distinguished between the rating and its outlook.
“The outlook has not been lowered; it has been changed”In his words, the reasons should be sought in the deficits accumulated in recent years, the increase in external debt and interest expenses. Dzhikov said that the proposals in the budget had prevented a more negative assessment and envisaged a gradual improvement in the indicators.
“Vazrazhdane” also attacked the government, with Dimo Drenchev questioning the promises that an improvement in the rating would lead to lower interest rates on loans. PP-DB MP Martin Dimitrov described S&P’s assessment as criticism of the cabinet’s budget policy.
What comes next
S&P notes that it could downgrade the rating itself if efforts toward fiscal consolidation slow down or come to an end. An upgrade would be possible if external imbalances and the current account deficit were durably reduced. The next political test will be the first vote on the draft budget for 2027 in the National Assembly next week.
Sources: bnrnews.bg, vesti.bg, nova.bg