Standard & Poor's Ratings Services announced it has raised its long-term foreign currency sovereign credit rating on Bulgaria to BBB from BBB-.

At the same time, the long- and short-term local currency sovereign ratings on Bulgaria were raised to BBB+/A-2 from BBB/A-3, and the A-3 short-term foreign currency rating was affirmed.

The foreign currency outlook is positive, while the local currency outlook is stable.

"The upgrade reflects the ongoing reduction in the general government debt burden, underpinned by the maintenance of prudent fiscal policies through the recent government change," said Standard & Poor's credit analyst Remy Salters.

"The upward rating momentum is also supported by Bulgaria's impending EU accession, which will help to lock in structural reforms and pave the way for Eurozone membership," he added.

Salters noted that continued fiscal prudence and careful management of external imbalances may lead to a foreign currency upgrade over the next two years.

The analyst warned that sustained increases in economic imbalances or significant policy slippage would preclude an upgrade, as might a delay to projected EU entry beyond 2008.