The rating agency Standard & Poor's reconfirmed the sovereign rating related to Romania's government debt to BBB- / A-3 for long-term and short-term debt in local currency and currency, as well as the negative outlook.
The rating agency's decision is based on the moderate level of public debt and external debt, but also Romania's flexible access to financing on the domestic and international market, which can mitigate possible risks associated with the high need for short-term public sector financing.
"The Standard & Poor's announcement reaffirms that the current Government's measures to combat the socio-economic effects of the COVID-19 crisis and ensure sustainable public finances have been the right ones in the current global context. As we have pointed out in the past, the agency of public finances was caused by the unsustainable increases of expenditures committed by the previous Government, by the irresponsibility of the pro-cyclical fiscal policy promoted in the last three years ”, declared the Minister of Public Finance, Florin Cîţu.
The agency's assessment highlights that the increase in public sector pensions, which is due to take place in September this year, would have a considerable impact on public finances. Last but not least, the rating agency appreciates that the expansionary fiscal policy promoted since 2018 has led to some of the biggest twin deficits for a country in the category of emerging markets, as well as to the erosion of the sustainability of public finances in Romania.
"In the next period, the Ministry of Public Finance will continue its efforts to implement measures to remove the negative effects of the SARS-CoV-2 virus pandemic and those necessary for the rapid restart of Romania's economy," the finance minister added.
The agency considers that the main factors that could contribute to improving the perspective are ensuring a real fiscal consolidation, leading to the stabilization of public finances and Romania's external position.
At the same time, Standard & Poors anticipates a gradual recovery of the economy starting from the middle of this year and a consistent resumption of GDP growth in 2021, around 4%.