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The joy of Prime Minister Boyko Borissov for the decision of the Moody’s agency to raise the credit rating of Bulgarians was enough, he organized a kind of literary reading in front of two ministers, filmed on video and posted on his Facebook profile.
But he did not say a word about the “fight against corruption, the independence of the judiciary and the rule of law” mentioned in several places in the agency’s statement.
Even the Ministry of Finance spread the news, saying that “the stable outlook takes into account the balance between the improvement of the economic and institutional environment in Bulgaria and the presence of key challenges for the rating, mainly related to the negative impact of demographic processes. on potential growth in the medium term. ,, and the need to continue reforms in the fight against corruption, the independence of the judiciary and the rule of law.“
There is no such thing for Borissov. “Look what it says now! I can’t believe it, but so it says …” successful completion of renovations “is written here, and supposedly no renovations were made here, well, where did these people from” Moody’s “look? ? “asked the Prime Minister ironically. And he continued with such innuendo – “What to please, I don’t know these people – our opponents? What to do!” and “this refutes everything clever, beautiful, ugly, stupid that …”
In fact, Borissov probably does not know, and the Ministry of Finance does not specify that the upgraded rating is (P) Baa1, that is. this letter is not mentioned in parentheses. Y means “preliminary, unfinished” – provisional rating. Moody’s explains that this is done because the “final” rating is granted after certain conditions are met, which “may affect the rating.”
This does not mean that the rating is not the same Baa1, but that there are conditions for it, for which investors must be warned and must comply with their actions.
Baa1 corresponds to Moody’s scale of “moderate credit risk” and the debt bonds issued with this rating “may have certain speculative characteristics”. In other words, Bulgaria is said to have one thing in mind, as it has adequate capacity to meet its financial obligations, but bad economic conditions or changing circumstances may reduce this capacity.
The agency lists positive parameters for Bulgaria in terms of level of indebtedness, budget and fiscal deficit and “strengthening of institutional capacity and development of effective policies”. But the reason is explicitly stated to be related to “Bulgaria’s progress towards accession to the eurozone”. IE Moody’s statewhereas the European Central Bank and the countries of the euro area have already carried out such an assessment; otherwise they would not have invited Bulgaria to the ERM II monetary mechanism.
Furthermore, an important clarification was made in the July ECB communication (which is not the case for Croatia, invited on the same day): “Bulgaria will also continue to carry out comprehensive reforms in the judiciary and anti-corruption and organized crime policy in Bulgaria, given its importance for the stability and confidence of the financial system “.
Dnevnik then asked the ECB who would oversee the implementation of these reforms and policies, and the answer was that it was the European Commission. And his assessment of Bulgaria in the September 30 Rule of Law Report was not flattering. Borissov and GERB called it “objective and positive.”
The second factor of the rating agency for its decision is “to strengthen the fiscal and credit profile of the country, despite the negative impact of the coronavirus pandemic.” But Moody’s is mainly concerned with one thing in this case: currency (mainly the currency board) and fiscal policy, and whether it is possible for Bulgaria to get money to pay off its loans, and not how, where, for what and with what efficiency. and accountability the government spends the budget or new loans taken in billions of euros.
And even after summarizing these two positive rating factors towards the end of the release, the agency added: “However, concerns about control of corruption and the rule of law continue to act as a deterrent to the rating.”
When speaking of “reforms”, the rating agency explicitly points out two things. The first is that it is about the implementation of the reform program to meet the requirements to be a member of ERM II, which confirms the confidence in Bulgaria’s ambition to adopt the single European currency, which it believes will not change in the government after the next parliamentary elections. and either.
The second was concealed by Borissov: “the continuing need for reforms in the fight against corruption, an independent judiciary and the rule of law”. Moody’s continues: “Concerns about these areas have sparked protests in recent months. Although some progress has been made on the 2019 European Commission report on the Cooperation and Verification Mechanism (edited a year ago).” Bulgaria still has a long way to go in these areas. “
Borissov’s stubborn silence does not change the fact that in its announcement Moody’s spoke about this issue for the fourth time in the section “What would raise the rating”. The answer is clear: “Pressure to improve the prospects for Bulgaria’s rating, and potentially the rating itself, will stem from fundamental improvement of the quality of the executive and judiciary, in particular the fight against corruption, the efficiency of public spending and the strengthening of the rule of law, which will bring the country closer to the performance of countries with investment rating A “(editor’s note: this is the next step of the rating up on the agency’s scale).
“Furthermore,” Moody’s continues, “a clear and sustainable path of convergence towards better infrastructure and a generally higher standard of living for institutions will guarantee entry into the eurozone, which will have an impact.” positive for the regent “.
Today, the prime minister visited the construction of a section of the road from Belitsa to Zagrazhden and spoke with a local resident who said they are currently driving through the area. Borissov then addressed Finance Minister Kiril Ananiev with the words “Here’s the assessment … the other thing, Ananiev, let them talk … hey, these are the people, the people.”
