Bucharest, October 14, 2023 – by rbj – The S&P rating agency reconfirmed, on October 13, 2023, the rating related to Romania’s government debt at BBB-/A3 for long- and short-term debt in foreign currency, as well as the stable outlook, it informs on Saturday the Ministry of Finance (MF).
According to the MF, the decision to reconfirm the sovereign rating and maintain the stable outlook is supported, in the agency’s opinion, by the reduced level of external and governmental debt, as well as by the solid growth prospects.
At the same time, S&P anticipates that Romania’s commitments within the EU Recovery and Resilience Mechanism (MRR) will continue to be an anchor for political and fiscal reforms.
“The reconfirmation of the rating by S&P is a recognition of our firm commitment to maintain economic stability, control the budget deficit and promote structural reforms. This fact helps us access the capital markets at lower costs and attract more foreign investment, which will contribute to economic growth, and for people it will mean job creation and improved quality of life. The Ministry of Finance maintains its priorities and objectives for the implementation of the measures that ensure the fiscal-budgetary consolidation and those necessary to ensure a sustainable economic growth of Romania in the medium term. We are committed to maintaining a prudent management of public finances and to gradually reduce the deficit”, declared the Minister of Finance, Marcel Boloş.
In the evaluation carried out, S&P highlights the commitments to continue the reforms and the balanced and credible fiscal agenda in the medium term supported by the Recovery and Resilience Strategy of Romania. It also emphasizes the resilience shown by the labor market in our country, as well as the increase in real wages, which became positive in March 2023, earlier than in many other countries in Central and Eastern Europe.
“Following the Fitch rating, we receive new good news: S&P reconfirms our rating and stable outlook. A new recognition of our firm commitment to maintain economic stability, control the budget deficit and promote structural reforms. Why is it important to us? It helps us access the capital markets at lower costs and attract more foreign investment to Romania. For people, it means creating jobs, higher wages and improving the quality of life. (…) How does this rating improve? Through the structural reduction of the fiscal deficit and the current account deficit. More simply, to have lower expenses than you receive. What the European Commission also asks of us, if we want to receive all the European money allocated to us for highways, schools, sewage system and many other vectors of development that influence our every day life. S&P has also confirmed that the package of measures taken by the Romanian Government is vital in this respect”, Boloș wrote on his Facebook page.
In the agency’s opinion, Romania’s economy will register an increase of 2.3% in 2023, almost 4% on average until 2026, given that our country will benefit from important European funds both from the Multiannual Financial Framework 2021- 2027, as well as from the Recovery and Resilience Mechanism (RMR).
The main factors that can lead to the improvement of the country’s rating or outlook are the structural reduction of the fiscal deficit and the current account deficit, as well as the sustained improvement of Romania’s economic performance. At the same time, the decrease in government public debt service costs by improving the debt structure can represent another positive factor.
“The agency could decide to worsen the country rating or the outlook if there will be a real growth of the economy significantly below the current expectations of the agency and if the government’s efforts are insufficient for fiscal consolidation in the medium term for the sustainable reduction of deficits“, states the MF.
On September 8, 2023, the Fitch rating agency reconfirmed Romania’s government debt rating at BBB-/F3 for long- and short-term foreign currency debt, as well as the stable outlook.