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Wednesday, September 15, 2004
LONDON (Standard & Poor's) Sept. 14, 2004--Standard & Poor's Ratings
Services said today it raised its long-term foreign currency sovereign
credit rating on the Republic of Romania to 'BB+' from 'BB'. At the same
time, the long- and short-term local currency sovereign credit ratings on
Romania were raised to 'BBB-' and 'A-3', from 'BB+' and 'B', respectively.
The outlook is stable.
"The upgrade reflects the country's significant progress in reforming its
state-owned enterprise sector, together with EU membership prospects,"
said Standard & Poor's credit analyst Moritz Kraemer. "Romania's recent
progress in structural reforms should lead to lasting improvements in
public sector finances. Moreover, prospects for deepening parastatal
reform are encouraging."
Improved macroeconomic stability and microeconomic reform have increased
the probability that Romania will become a member of the EU by the
official target date of 2007. The ratings remain constrained, however, by
institutional weaknesses, external imbalances, and low levels of economic
prosperity, although there would be a gradual catch-up with
investment-grade sovereigns if the government follows through on the
current reform agenda.
"Romania's improved prospects for becoming a member of the EU by 2007 are
balanced with its external vulnerabilities," said Mr. Kraemer. "EU
membership would make the economic modernization process irreversible."
A sustained commitment to fiscal consolidation and microeconomic reform
by the government that emerges from the November 2004 elections could lead
to an upgrade of the foreign currency ratings to investment grade in the
medium term. A delay to EU membership into 2008 would not in itself put
any downward pressure on the ratings on Romania. Nevertheless, further
weakening of the current account balance and the concomitant effects on
external debt and liquidity could lead to a lowering of Romania's credit
rating, especially if net foreign direct investment were to fall short of
Posted by Mihai : 9/15/2004 10:08:00 am
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