The negative outlook for Romania's rating is still justified by the fiscal imbalances, the debt structure and the volatile political scene with a coalition with little chance of survival, Barriga Salazar, director of the debt rating agency Fitch Ratings, argued.

In October, amid the political turmoil caused by the collapse of the former centre-right coalition, Fitch affirmed Romania's sovereign long-term rating (IDR) at BBB-, keeping it at the lowest investment-grade level and maintaining the negative outlook.

The negative outlook reflects continued uncertainty regarding the implementation of policies to address structural fiscal imbalances over the medium term and the impact on Romania's public finances from lingering pandemic risks and rising energy costs, the agency said at that time.

"We do not believe that this coalition will survive throughout its term, given the rather large differences between the two main partners," the Fitch Ratings director said in an online seminar on January 26, quoted by Bloomberg, Cursdeguvernare.ro reported.

The Fitch official argued that the good news of economic growth is overshadowed by fiscal imbalances, magnified by socially-inspired social spending. Under these conditions, "meeting the national Resilience Plan (PNRR) targets has become paramount and will be important in establishing the future rating," Barriga Salazar added.

andrei@romania-insider.com

(Photo source: Shutterstock)