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Moody's rating agency has changed Romania's outlook to negative from stable and affirmed the Baa3 rating for long and short-term debt in forex and local currency, the Public Finance Ministry (MFP) announced in a press release sent to AGERPRES on Saturday.
According to the quoted source, the agency's decision to affirm the country rating is based on Romania's solid economic growth potential, even in the context of the SARS-CoV-2 pandemic, as well as the moderate institutional capacity of the Romanian state. The agency estimates that Romania has a larger economy and a faster growth than other states in the same rating category (Baa3).
"Moody's announcement confirms that the current priorities of the Ministry of Public Finance, namely the adoption and implementation of fiscal-budgetary measures to combat the COVID-19 crisis and Romania's economic recovery are correct and responsible. Only after addressing this unprecedented crisis will we be able to talk about fiscal consolidation," says Finance Minister Florin Citu.
The relevant ministry maintains that the rating agency points out that the change in outlook took into account the structural deterioration of public finance, aggravated by the increase in long-term debt as a result of the pension reform adopted in 2019, as well as the deterioration of Romania's external position.
Factors that can lead to recovery of country's outlook are improved tax collection, reduced current spending, accompanied by other measures that would positively influence fiscal sustainability (increased investment spending and steady reduction of the current account deficit), the release reads.
