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Fitch affirms Romania at ‘BBB-’ with a stable outlook

Ratings

Photo by Willy Barton/Shutterstock.com

Fitch Ratings has affirmed Romania’s long-term foreign and local currency issuer default ratings (IDR) at "BBB-", with stable outlooks, but warned that keeping the 2019 budget deficit under 3% would require ad-hoc adjustments, Romania Journal has reported.

Photo by Willy Barton/Shutterstock.com

Romania’s investment-grade ratings are supported by moderate levels of government debt, and GDP per capita and human development indicators that are above "BBB" category peers, Fitch said on Friday.

These are balanced against twin budget and current accounts deficits, reflecting a pro-cyclical fiscal policy that poses risks to macroeconomic stability, and net external indebtedness that is higher than its rating peers, it added.

The ratings agency said that the structure of the deficit is increasingly rigid, as almost two-thirds of expenditure comprises wages and social transfers, while efforts to increase tax efficiency have been unsuccessful, Romania Journal noted.

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