Rating Rationale
[…] Moody's classifies the government's financial strength as medium, due to the country's low government debt burden and weak fiscal policy. Susceptibility to event risk is also assessed at medium, reflecting a number of transition- and credit crisis-related challenges, particularly a sharp economic recession, the unwinding of a large current account deficit and the aftermath of a credit boom. These risks are worsened by weak fiscal policy. A surge in government spending in 2008 left the government in a vulnerable state in the early part of the credit crisis, forcing the government to borrow from the IMF and EU.
Rating Outlook
The outlook is stable, balancing the poor macro picture against the financial support package from the EU and IMF and associated measures to reform fiscal policy and the public sector. The IMF/EU agreement was also accompanied by an important letter from the major international banks operating in Romania, stating that they are committed to the country and will support their Romanian subsidiaries as necessary. This announcement is supportive of the current rating as it means reduced external debt rollover risk in the short run, and a strengthened banking sector over the long run.
What Could Change the Rating - Up
The ratings would likely rise if institutional strength improved such that structural reforms were followed with greater rigor and consistency. Sustained implementation of a more prudent fiscal policy - increasing government financial strength - would also place upward pressure on the ratings. Such changes are unlikely without a major change in the political environment.
What Could Change the Rating - Down
The ratings would come under downward pressure if the IMF/EU financing programme unraveled due to implementation problems, which could be related to political instability. So far, however, the IMF/EU have been remarkably tolerant of the slow pace of progress.
Recent Developments
[…] Moody's does not expect any major impact from the government's collapse in the near term. The economy seems to be relatively well insulated from politics, and the IMF/EU are expected to continue to abide policy slippages until after the elections. Come the new year, however, the IMF and EU will likely pressure the government to re-commit to the reform process outlined in the stabilisation programme. Failure to rejuvenate the reform process could eventually lead to friction with international partners.
O sansa pentru Romania este guvernul primarului de la Sibiu. O alta optiune intersanta este economistul-sef al BNR, Lucian Croitoru. Poate fi Croitoru precum Isarescu? In asteptarea deciziilor Uniunii Europene de "reglementare" a agentiilor de rating, speram ca deciziile conationalilor cu sustinere aflati in pozitia de candidati la presedintie sa ne fie de folos.
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