Fitch Ratings has affirmed Bulgaria's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB' with a Positive Outlook. The rating agency grounded its credit estimate by strong external and public balance sheets, credible policy framework, EU membership and a long-standing currency board. The Positive Outlook reflects the prospect of euro adoption, which would lead to further improvements in external metrics. Despite renewed political instability, Fitch believes the authorities remain committed to euro adoption by 2024. Fitch expects Bulgaria’s real GDP growth of 3.5% in 2022 (3.0% in the previous report) as solid performance of energy sector and strong export are supposed to partially offset the negative impact of reduction in real disposable income and drop in investments. However, growth in 2023 is forecasted to slow down to 1.4% (compared to 3.8%) due to unfavorable carry-over effects and slowing private and public consumption. HICP is revised upwards to 13.1% in 2022 and 9.2% in 2023 (vs 11.8% and 6.0% respectively) with expectations to decelerate to 5.5% by end-2023. Budget deficit is forecasted to remain around 3.8% of GDP in 2022-2023. Fitch noted high uncertainty around the 2023-2024 winter, given that gas supply is likely to remain scarce in the absence of gas flows from Russia. The current political instability is believed to extend into 2023 with another election possible in early 2023. On the downside, the rating may be downgraded in the event of significant delay in the timeline of Eurozone accession or adverse macroeconomic shock caused by energy shortages, while improvement in growth potential and progress towards euro adoption are seen as potential upgrade drivers.