“Focus on forthcoming general elections”
However, the financial service agency maintained rating ‘A-3’ for short-term credits in lei.
Rating for transfer and convertibility was lowered to ‘BBB+’ from ‘A-‘. Ratings have negative outlook.
“The rating cut mirrors the rising risks for Romania’s economy, on concerns of high and rising debt of the private sector and the dependence resulted by unsecure foreign funding sources,” said Marko Mrsnik, S&P analyst.
“The agency did not attack these economic challenges, as the attention has been redirected towards the forthcoming general elections, which spurred the antagonisms and the lack of cooperation that the political landscape is experiencing”, he added.
S&P had cut Romania credit rating outlook to negative in November 2007 from “stable” to “negative”, citing concerns on soaring external unbalances, in the context of rising turmoil on international credit markets.
“It seems a decision without any solid background, if we look at Hungary, a country with higher rating, but with a narrower economic situation. Either way, the impact will be extremely negative for Romania,” stated Ionut Dumitru, senior economist at Raiffeisen Bank, NewsIn informs.
He stressed that pressures over the currency exchange rate would be overwhelming in the upcoming period, but the main consequence of country rating cut would by a markup of external funding, “which within a year will be reflected in the economic growth”.
Croitoru: S&P had an unfair approach on Romania
Standard& Poor’s had an unfair focus on Romania through the decision to cut rating, as the trade deficit started to back down as share in GBP together with lending growth pace, according to NBR governor councilor, Lucian Croitoru (photo).
“Trade deficit started to back down. I believe that in S&’s report it was more a tendency to negative arguments. It is true that international climate has worsened, but I think they were unfairly focused on Romania,” said Croitoru, NewsIn informs.
Councilor of NBR governor stressed that trade deficit “was at high level last year as well” and that in the past few months, the lawmakers had adopted measures to lessen the economic unbalances, referring to National Bank of Romania.
In first eight months this year, Romania’s trade deficit soared 1, 55% up to 10.006 billion euros, from 9.853 billion euros in similar interval last year, according to data made public by National Bank of Romania (BNR). In first half, Romania’s economy rose 8.8% and gross domestic product climbed to 195.8 billion lei.
“Arguments of the financial rating agency are valid, the fiscal policy is not solid enough, and trade deficit is high, however the lawmakers adopted measures, and I mean BNR. The benchmark lending rate increased to 10.25%, and lending growth pace tempered down in the past few months, on restrictions enforced by the central bank,” Croitoru added.
Translated by Camelia Oancea
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