Coface maintains Romania's B risk rating, given shaky political and economic environment

Romania remains vulnerable due to the persistency of foreign imbalances and insufficient budget adjustments, with banks likely to toughen once again the funding conditions in 2012 because of the strong aversion of investors towards the risk. The banking system is still affected by a high level of bad loans, according to the above-quoted source.

'2012 will be a tough year for the Romanian economy in the context of a gloomy European situation, the recession in the Euro Zone and a lower credit given the re-capitalization of the foreign banks from Romania. The Romanian companies will face a meager export demand, tougher funding conditions, also a weak private domestic consumption and a precarious level of investments,' Cristian Ionescu, country cluster manager Coface for Romania, Bulgaria and Slovakia, said.

According to him, after a modest recovery in 2011 generated by exports, the industrial production and agriculture, the pace of economic growth will slow down in 2012. The exports mainly shifted towards the recession-hit eurozone in proportion of 55 percent will plunge. The public investments could turn into the main engine of growth, in the context where the needs of the transport infrastructure remain extremely important. The co-funding from EU structural funds, whose absorption rate is the lowest of the European Union, will play a key role in this regard, according to the Coface report.

In addition, Coface says that the companies will continue to go bankrupt in 2012, due to the sluggish process of granting funding and the price hikes.

Over Jan. 2010 - Nov. 2011, Coface Romania's risk exposure has edged up over 300 percent, to 700 million euros and the insurer portfolio surged by 150 percent. The number of insurance requests moved up by 50 percent in 2011 compared to 2010, according to the data the company released.

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