Moody’s Predicts Bulgaria in Eurozone by 2026, Cites Risks

Moody's has projected that Bulgaria will join the Eurozone by the beginning of 2026. However, any signs of weakening institutional frameworks or further delays in adopting the euro could lead to a downgrade in Bulgaria's credit rating, according to the rating agency's recent announcement.

This announcement, part of Moody's periodic review of Bulgaria's credit profile, does not indicate an imminent change to the credit rating but highlights ongoing concerns. The review underscores that the fight against corruption remains a major challenge and exacerbates the negative impact of structural issues such as an aging population and inadequate infrastructure.

Moody's places significant emphasis on the current domestic political crisis in Bulgaria, noting the possibility of new early elections and the potential for reduced institutional effectiveness due to the ongoing political instability. The agency also points out that Bulgaria's efforts to adopt the euro are one of three positive factors affecting the country's credit profile, alongside its low debt levels and EU membership.

The pursuit of Eurozone membership has already strengthened Bulgaria's institutional and managerial capacities, according to Moody's. The stable outlook for Bulgaria's rating is linked to balanced risks, influenced by the positive effects of potential euro adoption. This outlook also depends on factors such as the increase in debt burden, changes in borrowing capabilities, and risks related to implementing the National Recovery Plan amid political deadlock.