S&P maintains Romania’s rating in investment-grade area

International rating agency S&P affirmed Romania’s sovereign credit ratings at BBB-/negative, thus keeping the country in the investment-grade category.

S&P kept the negative outlook and cited risks to the country’s fiscal and external balances over the next 18 months unless policymakers stabilize and consolidate the budgetary stance after this COVID-19-induced recession. Romania’s National Bank (BNR) is assumed to remain supportive as well.

“Romania’s access to external financing and still moderate external debt levels mitigate pressures from a reduction in foreign direct investment (FDI) and remittances in 2020,” S&P said in a press release.

The rating agency expects the economic and fiscal fallout induced by COVID-19 to push Romania’s net government debt to 43% of GDP in 2020, and interest spending to increase to just below 5% of the fiscal revenues, but it assumes significant budgetary consolidation after the 2020 general elections. The forecast sketched by S&P includes 5.5% GDP contraction this year and only partial recovery in 2021, followed by a moderate 3% per annum growth in the years to come.

Via Romania Insider