S&P looks at us differently

International rating agency Standard&Poor’s (S&P) took the first step towards improving Romania’s image. At the end of last week, S&P announced that the rating perspective registered an upward evolution, from “negative” to “stable.”

S&P’s decision is a consequence of foreign currency reserves’ improvement and of the progress registered by Romania as far as reforms are concerned.

S&P’s rating for Romania’s country risk currently reached a “B” level. The rating agency’s decision is the first positive move, after several negative evaluations obtained for more than two years. Ashok Bhatia, one of S&P managers, admits that, following IMF (International Monetary Fund) demands and taking into account the perspectives of an accelerated privatisation process, “Romania’s situation is better than initially anticipated.”

Foreign analysts are currently criticising the attitude S&P has displayed towards Romania over the last year. “Standard&Poor’s was too critical about Romania. Its current decision to improve the rating perspective is too late,” Matthew Voegel, an economist at the Merrill Lynch investment bank, told Ziarul Financiar.

Voegel says that S&P has ignored so far the substantial improvement of our country’s creditworthiness and of the reform process. He believes that Romania’s rating might increase after this autumn’s elections, irrespective of their result, following the political support enjoyed by the medium-term economic strategy and by the European Union joining programme.

In Voegel’s opinion, a crucial element that should influence foreign perceptions on Romania is the acceleration of the banking sector’s privatisation, as well as the privatisation of large companies, such as Petrom.

On the other hand, S&P maintains that “Romania’s ratings are generated by a weak economy lacking reforms, by the shaky public finances and by political instability.”

The Government did not comment upon the announcement made by S&P, as Premier Mugur Isarescu is still on vacation, but according to spokesperson Gabriela Vranceanu-Firea, the Prime Minister will display a public position in the days to come.