20 Oct 2026
In October, international rating agency S&P Global Ratings revised Stara Zagora Municipality’s credit rating outlook from stable to positive, while affirming its long-term credit rating at “BBB-”.
Macroeconomic Framework and Government Support
In assessing Stara Zagora Municipality’s credit rating, the agency evaluates several key factors that determine fiscal stability and financial management at national and local levels. S&P Global Ratings expects Bulgaria’s GDP growth to ease slightly but remain stable, averaging 2.6% over 2026–2029. Sustained GDP growth will support central government revenues and transfers to local authorities, including Stara Zagora, despite the fiscal consolidation expected in 2027.
The agency expects Stara Zagora Municipality to maintain an operating budget surplus through 2028. Capital grants and central government transfers will support the municipality’s investment programme, preserving its strong liquidity and low debt. These key factors underpinning expectations of strong growth and higher fiscal revenues prompted S&P to revise the credit rating outlook from stable to positive.
Strengths in Municipal Financial Management
This assessment reflects the view that Stara Zagora will benefit from Bulgaria’s favourable economic growth and stable central government transfers for infrastructure needs. The municipality’s deficit after capital expenditure will remain very low, preserving its strong liquidity and keeping debt below 5% of revenues.
Despite the constraints arising from the institutional framework and dependence on the central government budget—nearly 70% of the municipality’s operating revenues come from government transfers—prudent debt management and substantial liquidity buffers remain key strengths. The rating agency expects the municipality to avoid operating deficits and close each year with a small operating surplus through 2028. An upgrade to Stara Zagora’s rating could follow if Bulgaria maintains economic growth, generating higher revenues and grant funding, and the municipality succeeds in diversifying its own funding sources.
Economic Transformation and the Green Transition
Stara Zagora’s economy has traditionally been concentrated in the energy sector, which is estimated to account for 66% of gross value added in 2025. To mitigate the risks associated with the transition to clean energy, Stara Zagora Municipality plans substantial investments in critical infrastructure and new industrial zones.
Investment will focus on digitalisation, renewable energy generation from solar parks, energy storage batteries and components for electric vehicles. The main financial support for this modernisation will come from the Just Transition Fund, with nearly EUR 1 billion earmarked for the region. Another positive factor is Stara Zagora’s GDP per capita of approximately EUR 26,000, placing it third nationally and supporting strong purchasing power in the city.
The Euro Area and Future Prospects
Bulgaria’s entry into the euro area further supports growth in local economies and municipalities that rely on predictability and financial stability. In this context, the country’s sustained economic growth provides a solid foundation for Stara Zagora Municipality, which demonstrates excellent fiscal health, low debt risk and consistent budget performance. The positive outlook sends a clear signal to international and domestic investors that the city remains a secure, predictable and attractive destination for new business.
