Tuesday, November 11, 2008

Romanian finance minister criticizes Fitch for rating downgrade

BUCHAREST, Nov. 10 (Xinhua) -- The decision of the Fitch international ratings agency to downgrade Romania's rating disregarded important developments in the country's economy, Minister of Economy and Finance Varujan Vosganian said on Monday in a press release.

"The decision of Fitch disregarded important developments in the Romanian economy, such as an annual rise of 9.1 percent in real terms of its Gross Domestic Product (GDP) and an estimated 6 percent rise in the GDP in 2009 and keeping government debt at a relatively low level -- just 10.6 percent of the GDP in June 2008," Vosganian said, stressing that "Romania has enough foreign exchange reserves and an external debt burden that is lighter than that of other member states of the European Union."

Ratings agency Fitch has lowered on Monday the sovereign ratings on Romania by two notches, citing vulnerabilities in the emerging markets, spurred by the global financial crisis and the countries' high account deficits.

Romania's two-notch downgrade reflects Fitch's concerns about the macroeconomic policy framework in Romania and the country's ability to deal with a severe economic and financial crisis.

Fitch highlighted the need to have a much stronger policy adjustment to avoid the currency crisis, on Romania's current account seen at 14 percent of GDP in 2008 fueled by excessive credit growth.

Fitch also warned about the risks facing Romania's economy as a result of an increase in private debt on external markets, which are increasingly shakier. It says that the political decision makers of Romania have ignored the alarms amidst the electoral campaigning for the Nov. 30 general election, which has triggered negative consequences on fiscal policy cohesion.

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