S&P Downgrades Bulgaria’s Credit Rating Outlook from Positive to Stable

Bulgaria saw its long-term credit rating outlook lowered from positive to stable by S&P Global Ratings, the Ministry of Finance announced on Saturday.

The decision stems from worsening metrics in the country’s budget and external sectors, according to [nova.bg]. S&P affirmed the long-term and short-term foreign and local currency ratings at BBB+/A-2. International credit rating agency Standard and Poor’s revised the outlook from positive to stable, and according to the Ministry of Finance, the move reflects a combination of factors linked to weakening indicators in the fiscal and external sectors.

The budget deficit for 2026 is now projected to hit 5.1% of gross domestic product, with consolidation to 3% delayed until 2029, [bntnews.bg] reported. S&P cited weak exports and surging imports driven by high domestic demand as key pressures on the current account.

Private sector wage growth remained elevated at 11.7% during the first half of 2026, fueled by a tight labor market. Private credit expansion reached 21% for households, driven largely by mortgage lending, while real estate prices rose 15.5% through June.

GERB Lawmakers Criticize the Cabinet over Rating Action

Lawmakers from GERB criticized the cabinet over the rating action, arguing that the governing majority failed to tackle economic overheating.

“The downgrade of Bulgaria’s credit rating outlook by the international rating agency Standard & Poor’s shows that the government is failing to address the problems in the economy,” said Vladislav Goranov, GERB MP, according to [nova.bg].

Goranov pointed to persistent fiscal deficits, sluggish spending cuts, and declining investment as drivers of a widening current account deficit. He argued that the economy faces a double deficit fueled by borrowing and consumption.

“This double deficit for our economy means one thing – we borrow, consume, and finance the rest of the world through the excess of imports over exports.” said Vladislav Goranov. He criticized the governing authorities for failing to find solutions to the economic problems despite holding a parliamentary majority.

Temenuzhka Petkova, another GERB lawmaker, added that the draft state budget lacks structural consolidation or spending reforms.

“If we take a quick look at the consolidated fiscal program under the proposed draft law on the state budget, which has not yet been submitted to the Bulgarian Parliament, we will see that there is no such consolidation,” Petkova told [nova.bg](https://nova.bg).

S&P Projects Bulgaria's Real GDP Growth Through 2029

S&P projects Bulgaria’s real GDP will grow by 2.8% in 2026, supported by strong consumption and European Union-funded investment. Growth is expected to moderate to an average of 2.6% between 2027 and 2029. Public and private sector balance sheets remain stable, which underpinned the confirmation of the BBB+ rating, [Economic.bg] reported.

The rating agency indicated it could upgrade the rating if external imbalances shrink and the current account deficit drops sustainably. Conversely, a lack of progress on budget consolidation could prompt a further rating downgrade.

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