Standard&Poor's grants Romania confidence vote

After having watched Romania’s attempts to boost the economy for a year, rating agency Standards&Poor’s (S&P) upgraded Romania’s rating for the long-term foreign and domestic currency denominated debt, from “stable” to “positive.”

S&P says that Romania’s long-term rating is likely to further improve this year if the Government commits to accelerated reforms. “The endorsement of a prudent budget for 2001, the progress in state-owned companies restructuring and getting the IMF and World Bank financial support would improve the outlooks granted to Romania,” reads the S&P press release.

The decision to upgrade the outlook points out the confidence in the new Government’s commitment to speed up the EU accession process and economic reforms. It also acknowledges the slight improvements in the economic prospective and the maintenance of the foreign reserve increase, S&P maintains.

“Romania is currently at a crossroads. Adrian Nastase-led government has to use up the last granted chance,” Konrad Reuss, S&P London Director for Romania, told Ziarul Financiar, adding that S&P granted a confidence vote to the Romanian Government, which should be used to join the EU.

Reuss considers that the endorsement of a new coherent fiscal legislation and of lax fiscal measures will largely help the Romanian economy.

“Reform enforcement should accompany privatisation of state-owned companies and banks. We think Romanian authorities should be committed to privatise BCR, Banca Agricola and Sidex. These privatisations should be performed this year,” Reuss stated.

The Romanian economy slightly recovered last year after a three-year recession, due to the export boost (mainly on the EU market) which triggered a 2% economic growth, maintains the American rating agency.

Investments and private consumption are expected to go up this year and higher public expenses are estimated to trigger a 3-4% GDP growth.

S&P rating agency considers that even though disinflation may occur this year, the Government’s 27% target “is quite ambitious.”

In the American specialists’ opinion, the improvement of Romania’s ties with the IMF and the World Bank is crucial for the next months. It greatly depends on making actual progress in fields such as privatisation, restructuring, inflation cut and fiscal soundness, which the former executive failed to achieve.