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Thursday, March 24, 2005
Business in Romania blog
The comments below are copyright of Moody's.

In its annual report on Romania, Moody's Investors Service says that the positive outlook on the nation's Ba1 rating is based on the benefits of EU accession, stronger economic and political institutions, and improved external liquidity, balanced against the risk of overheating.

"The rapid growth of credit to the private sector (particularly in foreign currency), the related sharp increases in asset prices, and the large widening of the current account deficit all give us cause for some concern," cautions the report's author, Senior Vice President Nina Ramondelli.

The analyst explains that "the situation is further complicated by the government's decision to shift the monetary framework from relying on the exchange rate as an implicit anchor to inflation targeting later in 2005; this change occurs at the same time that the capital account is to be liberalized in order to allow nonresident investment in local currency instruments."

Moody's is optimistic, however, that EU membership will furnish support for sustaining the growth momentum now underway and for further improving the nation's debt and debt-service burden. "Deepening trade, financial and institutional integration with Europe should bolster Romania's ability to withstand potentially destabilizing capital flows," Ms. Ramondelli states.

For the complete comments please go HERE.

Posted by Mihai Botea : 3/24/2005 07:35:00 pm Positive Outlook for Romania's Ba1 Rating.
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