Fitch upgrades Romania's rating to 'investment grade'

International rating agency Fitch Ratings has upgraded Romania's long-term foreign currency issuer default rating (IDR) to 'BBB-' from 'BB+' and long-term local currency IDR to 'BBB' from 'BBB-'. The outlooks are stable. At the same time, the agency has upgraded the country ceiling to 'BBB+' from 'BBB' and the short-term foreign currency IDR to 'F3' from 'B'. "The upgrade reflects Romania's progress in recovering from the effects of the financial crisis, evident in a return of GDP growth, a strong export performance, narrowing in the current account deficit and reduction in its budget deficit," says Ed Parker, Head of EMEA Sovereigns at Fitch. "Overall, there has been a material easing in Romania's downside risks, commensurate with a return to an investment grade rating," adds Parker. Romania's economic recovery started in early 2011, with GDP up 1.6 percent year-on-year, after one of the longest recessions in the EU. The recovery is driven by strong export growth, which has seen Romania gain market share, while the contraction in domestic demand has also contributed to the necessary correction in the current account deficit to 4.2 percent of GDP in 2010 from 11.6 percent in 2008. Romania's ratings are supported by income per capita above the 'BBB' median and a relatively strong debt-servicing record, according to Fitch Ratings. The robust GDP growth and real income convergence with the EU, especially if underpinned by structural reforms, without generating macroeconomic imbalances would put upward pressure on the rating in the future. Sustained fiscal consolidation could also lead to positive rating action, according to Fitch Ratings. editor@romania-insider.com