Rating agency Scope projects Romania’s budget to be slightly less expansionary this year, compared to 2019 while stressing it remains much dependent on sustained high economic growth.

Scope Ratings evaluates Romania’s sovereign debt at BBB- with a negative outlook, in line with S&P, while the other two major international rating agencies Fitch and Moody’s have not downgraded the country's outlook to negative yet.

“The growth projections for 2020 of between 2.7% and 3.7% raise doubts regarding the attainability of this year’s already elevated deficit targets,” said Bernhard Bartels, lead sovereign analyst for Romania at Scope Ratings.

“The Government’s assumed growth rate of 4.1% exceeds even the most optimistic forecasts, assuming an unchanged rate of elevated domestic demand growth,” he added.

On the upside, Romania’s risks remain balanced by the economy’s high potential growth rate, moderate levels of public debt - around 37% of GDP, and stable financial sector.

“Moderate gross government financing needs of around 8% of GDP and the low interest-rate environment curb short-term risks to debt sustainability while the fiscal framework remains a substantial medium-term challenge for public finances,” Bartels concluded.

editor@romania-insider.com

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