Credit ratings agency Standard & Poor's cut Bulgaria’s sovereign credit ratingto BB+ from BBB- with a stable outlook.

The credit ratings agency explains the downgrade with the situation at Corporate Commercial Bank (KTB, Corpbank), which suffered a run on deposits and had to be taken over by the central bank, as well as the provision of liquidity support to First Investment Bank, and the fiscal deterioration throughout the year.

S&P attributes the deterioration of Bulgaria’s fiscal position to the weak economic growth and the deflation processes registered in the country.

The stable outlook reflects the low indebtedness of the public sector, which balances the risks in the financial sector, according to S&P.

Asked to comment on the downgrade of Bulgaria’s sovereign credit rating, Finance Minister Vladislav Goranov pointed out that the credit ratings agency had taken into account past events for which the current government was not to be blamed.

He argued that the weak economic growth and the risk of deflation were problems for a number of EU countries.

Goranov, as cited by the government’s press office, noted that S&P had also failed to take into consideration a number of positive developments, including the measures included in the medium-term budget forecast and policies aimed at shrinking the budget deficit.

He also underscored that the payment of insured deposits at KTB had started on December 4 and that the blocked payments under the EU operational program Environment had been restored.

Goranov assured that the government was aware of S&P’s position on how to improve the country’s rating and was convinced that the agency would soon have a reason to reconsider its opinion.