In a press statement on Friday, Moody's also says fiscal policy will remain impervious to recent political volatility because fiscal reforms have helped Romania bring down its fiscal deficit to 1.5 per cent of GDP in 2014, compared with 8.9 per cent in 2009. However, the rating agency notes that Romania has a relatively high external debt burden and inefficiencies in some state-owned enterprises pose contingent liabilities for the Government while constraining infrastructure development.
"Romania continues to enjoy robust economic growth, resulting from higher exports and domestic demand amid a low-inflation environment. However, weak domestic credit growth means there is limited room for higher economic activity," says Mathias Angonin, analyst at Moody's.
According to Moody's, reduced deficits and improved economic growth support Romania (Baa3 stable), although its high external debt burden and the risk of a slowdown in regional trade pose challenge. At the same time gradual economic integration with its European neighbours continues to enhance productivity, in addition to financial support and policy vigilance from the European Union and the International Monetary Fund. Risks emanating from the banking sector have reduced, says Moody's report, as banks' asset quality has improved following a decline in non-performing loans.
Standard&Poor's and Fitch have both awarded Romania's long-term forex loans a 'BBB minus' rating. (source: actmedia.eu)
