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February 24, 2021

Moody’s could worsen prognoses on Romania’s budget deficit

Moody’s could revise upwards its prognoses on Romania’s economic contraction and budget deficit which currently stand at 4 per cent and 5.1 per cent respectively, but considers that a possible failure of the agreement recently signed with the International Monetary Fund (IMF) is unlikely.

‘Our most recent prognoses point to a GDP contraction of 4 per cent but I’d say that the figure will most likely be revised upwards soon, with the contraction set to be higher. We are currently expecting a budget deficit of 5.1 per cent of GDP and a current account deficit of approximately 5 per cent of GDP,’ Kenneth Orchard, Moody’s analyst, stated for Mediafax.

The analyst pointed out that the current rating is based on the successful continuation of the economic stabilization program negotiated with the IMF and the European Union, but that a possible failure of the program could lead to pressure for the reduction of the country rating, although Moody’s decision will depend on the given circumstances. ‘The rating’s outlook is stable. Generally there are small chances for Moody’s to raise the rating of a country that is in the early stages of its program with the IMF. If Romania will not attain its goals then we expect the IMF and the EU to work carefully with the Romanian authorities on a recovery program. This was seen in other countries too. The plan’s failure looks fairly unrealistic,’ Orchard stated.

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