Fitch Ratings has affirmed Romania’s long-term foreign and local currency Issuer Default Ratings (IDR) at ‘BBB-‘and ‘BBB’, respectively, and stable outlooks, Romania’s Finance Ministry reported on Sunday.
‘Romania’s ratings are underpinned by its marginally better fiscal position than its ‘BBB’ peers, and its relatively positive economic outlook, with GDP expected to grow at close to potential over the next two years,’ according to Fitch.
‘For 2015 and 2016, Fitch forecasts Romania to grow close to potential, at real growth rates of 2.7 per cent and 2.8 per cent, respectively […]Contrary to the government’s target to meet its medium-term objective (MTO) this year (structural fiscal deficit 1.0 per cent of GDP and headline fiscal deficit of 1.2 per cent of GDP), Fitch’s forecast is for a headline fiscal deficit 1.5 per cent of GDP.’
The agency also projects general government debt-to-GDP to peak at around 39 per cent of GDP; both the deficit and debt ratios are still below the ‘BBB’ medians.
The main factors that could, individually, or collectively, trigger Fitch’s positive rating action include higher trend economic growth and progressive convergence towards income levels of higher rated peers; a faster and sustained reduction in external debt ratios.