Standard & Poor's Ratings Services revised its outlook for Bulgaria to negative from stable on low economic growth, high unemployment and political uncertainty amid recurring protests. However, Bulgaria's Finance Ministry disagreed with S&P's pessimistic economic growth prospects in an e-mailed statement, saying increased net exports and consumption, rising retail sales and industrial output, give reasons to expect higher economic growth, Bloomberg reports.
Retail Sales
Retail sales rose 6.9% in October from a year earlier, extending seven months of growth, while output rose 4.% in October, according to the statistics office.
"The government adopted a series of measures to reduce the administrative burden on businesses and encourage economic growth after a long period of suppressed investment," Finance Minister Petar Chobanov said in the statement.
The government's 2014 economic growth forecast is 1.8%, while the International Monetary Fund estimated 1.6%.
Bulgaria's economy expanded 0.7% in the third quarter, extending 12 quarters of growth, according to data compiled by Bloomberg. Private-sector credit has growth 3% between 2010 and 2012 and resolution of non-performing loans, which are estimated at 17% of total loans, has also lagged behind, S&P said.
The yield on Bulgaria's euro-denominated bonds maturing in 2017 rose 2 basis points, or 0.02% point, to 1.859% at 12:20 p.m. in Sofia yesterday. The cost of insuring the country's debt against non-payment for five years using credit-default swaps rose two basis points to 124.
Bonds, Debt
Bulgaria plans to raise about EUR 1 billion euros of Eurobonds next year to repay maturing debt, Prime Minister Oresharski said in an interview on Nov. 12. Bulgaria's general government debt will increase to 15% of gross domestic product in 2016 from 12% this year, according to S&P.
S&P sees no "significant deviation from Bulgaria's robust fiscal track record" and estimates this year' budget deficit to widen to 2% of GDP, driven by increases in social payments and pensions and repayment of arrears to the corporate sector, which is also the government's target.
