Romanian analysts argue that the downgraded credit rating of Romania by financial rating agency Fitch below the investment grade is undeserved, groundless and unprecedented in a European Union country. They say the analysis made by the agency is incomplete and disregards the economic fundamental elements.
Fitch’s decision comes after Standard&Poor’s rating agency also downgraded Romania’s credit rating below the investment grade, in October, arguing there are risks determined by the high financing demand in the international lending markets.
“The downgrading is groundless. The arguments refer chiefly other countries in the region, which are not yet included in the ‘investment grade’ bracket, and Romania is the only exception”, chief economist at the Romanian Commercial Bank (BCR) Lucian Anghel says.
“The decisions on the credit rating should have waited for the Government to unveil a multiannual budget. It would have been a correct evaluation and a signal for the next Government, if the adopted policies had not been sustainable”, Anghel stressed.
Fitch and S&P raised the issue of the Romanian current account deficit, with Fitch expecting it to go up from last year to more than 14% of gross domestic product, being fuelled by a very high pace of the rise in lending.
Fitch and S&P raised the issue of the Romanian current account deficit, with Fitch expecting it to go up from last year to more than 14% of gross domestic product, being fuelled by a very high pace of the rise in lending.
“Actually, the figures show the adjustment of the current account deficit has already begun, with this having dropped as a percentage of GDP, while lending is slowing down substantially”, says chief economist of Raiffeisen Bank Romania Ionut Dumitru.
He argues that Fitch’s decision overlooks at least three fundamental arguments that would justify an “investment grade” rating for Romania, namely that the country belongs to the EU club, it has a very low public debt and a very high potential of long-term economic growth.
The BRD-GSG bank chief economist Florian Libocor says Fitch’s decision is funny to say the least. He says Fitch staff have proved they are unable to evaluate the state of the Romanian economy, “since you cannot do it in just two phrases referring the foreign deficit only”.
Former Finance Minister Daniel Daianu, currently a member of the European Parliament’s Commission on Economic and Monetary Affairs, said the Fitch analysts are worried over the size of the foreign deficit and the pressure put to raise salaries as Romania, unlike other countries, doesn’t have room for manoeuvre in its fiscal and money policies.
Senior analyst of rating agency Moody’s Kenneth Orchard, who is specialised in the countries in the region, says the economic growth while positive will be lower than in the last years. “The status of a EU member country will not disappear and Romania will remain an attractive destination for the long-term investors”, he said.
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