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The figures and creditworthiness assessments are retained as a record of the analysis at the time. The suggested link between low debt, stable taxes and investment security does not constitute a guarantee. Present-day decisions require data and rules applicable to the period in question.
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Bulgaria’s debt currently amounts to EUR 13.7 billion, having risen by EUR 2 billion last year. Most of the money, almost all of the new debt, went towards compensating depositors of Corporate Bank, the country’s fourth-largest bank. Substantial funds were also allocated to building individual motorway sections. It is no coincidence that Coface, one of the most prestigious international consulting firms, has upgraded its assessment of Bulgaria and clearly told those it advises to purchase Bulgarian debt securities that the risk is acceptable. This further confirms that Bulgaria ranks third among European countries for its debt-to-GDP ratio, behind the not particularly wealthy Estonia and first-placed Luxembourg. Bulgaria’s debt-to-GDP ratio is 28.7%. This is an exceptional result and a major selling point for potential government-bond buyers. It should be noted that this year the law prevents new foreign borrowing: needs are so small that, if necessary, government securities will be sold exclusively to local investors. This is clearly connected with accumulated fiscal reserves of EUR 6.5 billion and the EUR 750 million budget surplus for 2016.
However, there is something to watch concerning the budget and public debt: the forthcoming early parliamentary elections in spring. Preliminary polls show roughly equal support for the two main political parties, BSP and GERB. In any event, all experts and observers expect GDP growth to slow this year.
Low debt will in any event contribute to economic growth and ensure tax stability for investors, including foreign investors, avoiding tax increases.