Bulgaria's Cabinet has authorized Finance Minister Simeon Djankov to terminate the existing contract with the Japan Credit Rating Agency (JCRA).
JCRA has been one of the four international credit rating agencies that Bulgaria's government has had contracts with; at present, Bulgaria has contracts for credit rating services only with Moody's and Standard & Poor's, after in 2010 Djankov moved to terminate the contract with Fitch.
The credit rating service agreement between Bulgaria and JCRA was signed in 2005; it expired on June 30, 2007, but gets automatically renewed each year unless another agreement is negotiated.
Bulgaria pays about BGN 50 000 (before the VAT), or approx. EUR 25 000 or JPY 2.5 M, for the services of the Japan Credit Rating Agency, which cover all activities having to do with Bulgaria's long-term foreign currency debts.
According to the Bulgarian government press service, the decision to give up JCRA's services was made after a detailed analysis of the expediency of having contacts with several credit rating institutions providing similar services, while taking into account the need to reduce state spending.
The government believes that Bulgaria's remaining contracts with Moody's and Standard & Poor's are sufficient to cover its needs of internationally recognized credit rating services, which is a major condition for having access to the international capital markets.