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Iulian Ernst
Senior Editor

Iulian studied physics at the University of Bucharest, and he sees himself as a physicist in the broadest sense of the word. He also studied economics at Charles University in Prague and Central European University in Budapest, after a master’s program in business administration at Bucharest Academy of Economic Studies. Since recently, he’s been exploring coding and data analysis for business and economics. As a freelancer, he worked for nearly two decades as an analyst for ISI Emerging Markets, Euromonitor International, Business New Europe, but also as a consultant for OMV Petrom and UkrAgroConsult. Iulian was part of the founding team of Ziarul Financiar. At Romania Insider, which he joined in 2018, he is reviewing the latest economic developments for the premium bulletins and newsletters. He would gladly discuss topics such as macroeconomics, emerging markets, Prague, energy sector including renewable, Led Zeppelin, financial services, as well as tech start-ups and innovative technologies. Email him at [email protected] 

 

BCR chief economist says rating agencies will push decision on Romania until after the elections

The major rating agencies, all of which have scheduled reviews for Romania's sovereign debt in October or early December, will wait to see the new Government's plans after the December 6 elections, says BCR's chief economist Ciprian Dascalu.

This scenario is based on consensus expectations that the general elections will take place on December 6, and the Liberals will be able to form a new Government that will come up with a credible fiscal consolidation plan. It remains unclear how such a plan would look, but finance minister Florin Citu assured it would not include higher taxes.

However, reversing the pro-cyclical expenditures passed by the Social Democrats in Parliament is not a straightforward legislative job, and further delays in holding the general elections might make it nearly impossible. As of October 14, the electoral calendar was reset by a Constitutional Court ruling that trashed the Government's decision on the elections' date and allowed the lawmakers to decide.

Assuming no change in the electoral calendar, which still remains the baseline scenario despite the rhetoric of the Social Democrats, BCR's chief economist unsurprisingly judges the rating agencies' actions in terms of fiscal consolidation and its impact on the public debt.

Thus, if the public debt shows signs that it is heading towards the level of 60-65% of GDP (in line with the A-rated countries), we can expect the agencies to downgrade Romania's debt to junk, Dascalu said. But if it shows signs of balancing, that it could reach a peak of 50% of GDP in two years, to later decrease, the rating could even improve, he concluded.

[email protected]

(Photo source: Lovelyday12/Dreamstime.com)

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Profile picture for user iuliane
Iulian Ernst
Senior Editor

Iulian studied physics at the University of Bucharest, and he sees himself as a physicist in the broadest sense of the word. He also studied economics at Charles University in Prague and Central European University in Budapest, after a master’s program in business administration at Bucharest Academy of Economic Studies. Since recently, he’s been exploring coding and data analysis for business and economics. As a freelancer, he worked for nearly two decades as an analyst for ISI Emerging Markets, Euromonitor International, Business New Europe, but also as a consultant for OMV Petrom and UkrAgroConsult. Iulian was part of the founding team of Ziarul Financiar. At Romania Insider, which he joined in 2018, he is reviewing the latest economic developments for the premium bulletins and newsletters. He would gladly discuss topics such as macroeconomics, emerging markets, Prague, energy sector including renewable, Led Zeppelin, financial services, as well as tech start-ups and innovative technologies. Email him at [email protected] 

 

BCR chief economist says rating agencies will push decision on Romania until after the elections

The major rating agencies, all of which have scheduled reviews for Romania's sovereign debt in October or early December, will wait to see the new Government's plans after the December 6 elections, says BCR's chief economist Ciprian Dascalu.

This scenario is based on consensus expectations that the general elections will take place on December 6, and the Liberals will be able to form a new Government that will come up with a credible fiscal consolidation plan. It remains unclear how such a plan would look, but finance minister Florin Citu assured it would not include higher taxes.

However, reversing the pro-cyclical expenditures passed by the Social Democrats in Parliament is not a straightforward legislative job, and further delays in holding the general elections might make it nearly impossible. As of October 14, the electoral calendar was reset by a Constitutional Court ruling that trashed the Government's decision on the elections' date and allowed the lawmakers to decide.

Assuming no change in the electoral calendar, which still remains the baseline scenario despite the rhetoric of the Social Democrats, BCR's chief economist unsurprisingly judges the rating agencies' actions in terms of fiscal consolidation and its impact on the public debt.

Thus, if the public debt shows signs that it is heading towards the level of 60-65% of GDP (in line with the A-rated countries), we can expect the agencies to downgrade Romania's debt to junk, Dascalu said. But if it shows signs of balancing, that it could reach a peak of 50% of GDP in two years, to later decrease, the rating could even improve, he concluded.

[email protected]

(Photo source: Lovelyday12/Dreamstime.com)

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