Fitch Ratings: Romania has lowest borrowing needs in CEE 4, can withstand market turbulence

Romania and three other countries in Central and Eastern Europe, namely Poland, the Czech Republic, and Hungary will need to borrow EUR 78.5 bln in 2014 to finance deficits and roll over existing debt, according to a recent report by Fitch Ratings. Out of this amount, Romania needs to borrow EUR 13.2 billion, the lowest amount of the four, according to the report. “Moderate budget financing and debt redemption needs should help CEE-4 countries withstand market turbulence from the graduate withdrawal of US extraordinary money stimulus,” Fitch Ratings' report writes. The agency also notes that all four countries have improved since the crisis, and that Romania and Hungary also benefit from multilateral financing agreements. For Romania, Fitch data shows that the country has a Gross Borrowing Rate (GBR) of 8.9 percent of its Gross Domestic Product (GDP), which is higher than Poland's 7.5 percent, but lower than the other two countries: 10 percent of the Czech Republic, and 18.9 percent for Hungary, which is also listed as the most vulnerable. Overall, the financing needs of the four countries equate to 9.5 percent of CEE-4 GDP and “compare favourably with an expected gross public borrowing requirement for the eurozone of 15.1 percent”. “However, as in previous years, there is some dispersion within the CEE-4, with Hungary having larger financing needs in relative terms,” according to Fitch Ratings. In late 2013 and early 2014 positive market sentiment towards emerging markets prevailed, allowing Poland, Hungary and Romania to issue Eurobonds on favourable terms. “An improving macroeconomic picture should also facilitate budget goals. Externally, CEE-4 countries are running current account surpluses and possess substantial buffers, including multilateral financing arrangements for Romania and Poland. Nevertheless, Romania and Hungary’s medium and long-term debt redemption profiles will continue to be affected by the repayment of loans from multilateral institutions,” the agency goes on. Get the full report issued by Fitch Ratings here (in English, in pdf). editor@romania-insider.com