Erste expects Romania to retain investment-grade rating as major agencies review it

Erste Group Research says it expects Romania to retain its investment-grade status after all three major rating agencies review its creditworthiness over the next week, Bursa.ro reported.

Last year, all three rating agencies assigned negative outlooks for Romania's rating, which is just above the speculative investments area.

Moody's and S&P will publish their country updates on Friday, April 16, while Fitch will follow next week.

The major risk for Romania's rating was the increase of the pensions by 40%, a risk that was eliminated after the December general elections. Most likely, however, the rating agencies will highlight Romania's fragile fiscal position and large current account deficit.

The Government plans to extend the fiscal correction over the next four years - reducing the budget deficit - to below 3% of GDP in 2024, a correction planned largely by streamlining tax collection and reducing evasion, not by raising taxes. The Fiscal Council issued a positive opinion regarding the Government's gradual fiscal consolidation plan.

"Normally [the rating agencies] have no reason to change either the outlook or the rating. On the contrary, I would say that we have a positive evolution in the sense that we have a [planned] correction of the budget deficit, we have a consolidation program," said Ionut Dumitru, former president of the Fiscal Council.

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