Romania’s junk credit rating maintained by S&P

Standard & Poor’s affirmed Romania’s junk credit rating for a fifth year as “high” external debt is balanced by budget rigor. The eastern European country’s long-term government bond rating was maintained at BB+, one level below investment grade, S&P said Thursday in a statement. It left the outlook on the rating at stable. “Romania’s ratings are constrained by its comparatively low per capita gross domestic product, developing institutions, and vulnerability to external shocks owing to its still-high, albeit declining, external debt,” S&P said. “The stable outlook reflects our opinion that Romania’s government will continue to consolidate its public finances.” Romania is struggling to shed its junk rating after embarking on one of European Union’s toughest austerity programs in 2010 with a 25% cut in state wages and a 5 percentage-point increase in the value-added tax. The government, which arranged two international bailout loans, narrowed the budget gap to 2.5% of GDP last year from 7.2% in 2009. Public debt was about 36% of GDP in January.