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Tuesday, November 16, 2004
Japan Credit Rating Agency has upgraded the rating on foreign currency long-term senior debts and the rating on local currency long-term senior debts of the issuer from BB and BB+ to BB+ and BBB-, respectively.
The rating reflects the country's generally improving macroeconomic indicators, an expectation of further acceleration of economic growth on progress in the privatization of large energy utilities, which has been a long-standing concern for the country, JCR expressed in a report.
The maintenance of fiscal discipline, an appropriate control of public debts through prolonged maturities and the higher possibility of the country becoming a member of the EU in 2007 following its designation as a "functioning market economy" by the European Commission also contributed to the rating upgrade.
On the other hand, the rating is constrained by the country's external weakness as exemplified, in particular, by the high level of current account deficit and the need of improvement in qualitative factors, such as corruption and human rights records.
According to the JCR report, the rating outlook has been kept positive, primarily in view of a favorite economic outlook and improving prospects of the fiscal and the debts situation.
Romania's Gross Domestic Product (GDP) grew 6.6% in real terms (year-on-year) in the first half of 2004, underpinned by the expansion of private consumption and gross fixed capital investment.
The GDP growth is expected to accelerate to 7.6% in 2004 as a whole.
While the expansion of private consumption is estimated to decelerate due to the stricter lending norms applied by the National Bank of Romania (BNR), gross fixed capital formation will grow steadily as capital investment mainly by foreign enterprises will remain strong.
JCR estimates that real GDP will continue to grow more than 5% annually through 2008.
However, continued caution will be required, as Romania's inflation rate remains one of the highest among the Central and East European countries.
JCR considers it important for the government to maintain its close relationship with the IMF in order to maintain international confidence in the Romanian economy.
Posted by Iulia Rasoiu : 11/16/2004 10:54:00 am
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