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Standard & Poor’s might improve Romania’s rating

Standard & Poor’s (S&P) might improve the perspective of Romania’s rating from “negative” to “stable” if the state continues to implement reforms established with IMF, according to an analyst of the financial evaluation agency.

The recent evolution, the accord with IMD and EU and also to the political context and the slightly better situation concerning foreign financing, has a positive impact on the rating. IMF and EU demands have been observed so far, but the implementation of these measures should be supported in the months to come, thus stabilizing the rating perspective, Marko Mrsnik, associate director at the S&P division for country ratings told Reuters in an interview.

In order to improve its rating, Romania must continue to restructure public finances and find a growth model different from the one based on consumption from previous years, Mrsnik considers. If the process of state finance consolidation is sustained, and a change will take place in the structure of growth, it will reduce risks accumulate in the last years. These two aspects, together with a stable political climate are the most important for the basis of Romania’s rating, he added.

Romania has chances of reaching the budget deficit target of 5.9% of GDP, established with IMF for 2010, but there are risks concerning the rate of economic recovery. The budget deficit for 2009 is estimated at 7.3% of GDP.

The comments of the S&P analyst come after the financial evaluation made by Fitch agency which reviewed on Tuesday the perspective of Romania’s sovereign rating, from “negative” to “stable”, as a result of resuming the accord with IMF.S&P announced on 13 January that the adoption of the budget and resuming the accord with IMF may determine a positive change in perspective in Romania’s case. The state has a BB+ rating from S&P, the highest in the junk category with negative perspective.

Foreign investors showed confident about Romania in January, the leu having the best evolution against euro from among currencies of Central European states.

“Information from S&P is positive but the dollar limits the market reaction” and analyst said.

Romania has an on going foreign financing program of 20 billion euro, coordinated by IMF, in which the European Commission, the World Bank, EBRD and EIB participate.

An IMF mission announced last week after the conclusion of the evaluation, that it would recommend the board from Washington to grant two installments of 2.3 billion euro to Romania as part of the loan.

In the period when the IMF delegation was in Bucharest for the evaluation of the accord, the minister of public finance Sebastian Vladescu declared that he expected an improvement of the rating granted to Romania by international agencies when the IMF mission left.

Romania and Latvia are the only two EU states with rating below the level recommended for investments. Romania is evaluated at BB+ by S&P and Fitch for long term loans, while Moody’s is the only rating agency which has not lowered the country rating to the “junk” category.

Sursa: http://www.actmedia.eu

Tags: romania rating perspective rsquo improve euro

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