Fitch Ratings revised Romania’s Outlook to Stable
February 2, 2010
02 February 2010 – Fitch Ratings has revised Romania’s Outlook to Stable from Negative and confirmed the country’s rating for long-term foreign and local currency Issuer Default Ratings (IDRs) at ‘BB+’ and ‘BBB-‘ .
“The improvement in external financial and economic conditions, sharper than expected narrowing of the 2009 current account deficit, passing of immediate election-related risk, adoption of the 2010 budget and expected normalisation of relations with the IMF have eased downward pressures on Romania’s sovereign ratings,” is in a statement made by David Heslam, Director in Fitch’s Sovereign Group.
Fitch also expects that the growth of fiscal consolidations will continue in the years to come, to sustain the economy’s external adjustment and lessen the upward trend in public debt ratios. Fitch estimates that Romania’s general government debt (including guarantees) will reach 33% of GDP at end-2010, compared with 21.8% at end-2008.
Romania’s economy experienced a sharp adjustment last year. According to the rating agency, GDP fell by 6.9% in 2009, as a result of falling private domestic demand. But encouragingly, this has lessened Romania’s demand for imports and supported a sharper-than-expected adjustment of the country’s current account deficit (CAD). Fitch
estimates the 2009 CAD at 4.5% of GDP, down from about 12% in 2008, and forecasts the CAD to remain around 5% of GDP in 2010-11.
The improved external economic and financial environment has aided a stabilisation of the RON, helping to contain the deterioration of domestic balance sheets (over 50% of domestic lending is in foreign exchange) and pressure in the banking system.