S&P: IMF agreement not enough

The new stand-by loan agreement Romania has concluded with the International Monetary Fund is not enough for the country rating to be upgraded, said Konrad Reuss, country rating manager with Standard and Poor’s for Europe, the Middle East and Africa.

“Ratings could be upgraded over the next two years if Romanian authorities carry through the reform process, especially since the outlook for Romanian ratings is positive,” Konrad Reuss added.

The agency has just upgraded the long-term ratings granted to Bulgaria, following progress made by the new Sofia executive in developing economic reforms and due to the chances of continuing the reform process.

Following this decision, Bulgaria’s long-term debt rating went up from “B plus” to “BB minus.” The modification will facilitate the sale of eurobonds, worth 700 million euros, which Bulgaria is planning to issue next year on the international markets.

As for Romania, Reuss says that it is very important for the Romanian Government to accelerate structural reform and solve the long delayed problem of large state-owned loss-making enterprises, even if this could trigger social unrest.

The Standard & Poor’s official outlines that this is the seventh agreement Romania has signed with the International Monetary Fund, but all previous accords were abandoned before being finalised.

The Executive must reach all the objectives pledged in the IMF agreement and attain the targets regarding fiscal and budget deficit, which “are not exceedingly ambitious,” Reuss maintained.

The International Monetary Fund two weeks ago approved the stand-by loan agreement with Romania, worth 300 million SDR (about 383 million dollars), with the first instalment of 52 million SDR (66 million dollars) immediately available.