January 28 (SeeNews) - Bulgaria presents a low risk in the next 5-10 years from the perspective of debt sustainability, the European Commission said in a report.
Despite the debt to Gross Domestic Product (GDP) ratio being on an increasing trend, no sustainability risks appear over the medium term thanks to the very low starting level of the debt ratio, the European Commission's financial directorate said in its fiscal sustainability report on Wednesday.
Bulgaria shows no significant short-term risks of fiscal stress, though some variables such as the primary deficit, the change in the share of short term public debt, the net international investment position and the share of non performing loans point to possible short term challenges.
In the long term of over 10 years, assuming fiscal policy remaining constant, the deficit in the structural primary balance will impinge on the sustainability of public finances. Indeed Bulgaria appears to be at medium risks because of the unfavourable initial budgetary position slightly compounded by the age related expenditures on health care and long term care.
Bulgaria's gross public debt, which is on an increasing path since 2011, would reach 33.6% of GDP in 2017, up from increase 31.8% of the country's GDP in 2015, the Commission said . By 2026, the Commission projects it to reach 42% of Bulgaria's GDP.