Moody’s: Fiscal relaxation in Romania generates risks

Romania has made significant progress in adjusting macroeconomic imbalances and fiscal consolidation, but continuing the tax cuts, which began two years ago, could negatively affect the fiscal outlook and economic competitiveness, according to a report by Moody's. The ratings agency estimates that the budget deficit will reach 3% of GDP this year and will exceed this threshold in 2017, given that the fiscal measures announced by the Government will cancel the effects of economic growth. Moody's believes that the substantial deterioration in the fiscal position of Romania and its impact on debt trajectory could have a negative effect on the country rating. Romania currently has a Baa3 rating from Moody’s, with a positive outlook. Some of Romania’s strong points include a moderate public burden and an improved legal framework, as well as the prospects for favorable growth in the medium term and economic competitiveness, according to the Moody’s report. The Romanian economy will grow by 4.8% this year and 3.7% and 3.3% in 2017 and 2018, according to estimates by the agency. editor@romania-insider.com