BUCHAREST, July 9 (Reuters) - Moody's Investors Service said on Thursday it had kept its outlook on Romania stable, but failure to stick to an IMF-led financing deal would put downward pressure on ratings.
Moody's is the only major rating agency to keep Romania at investment-grade level, after Standard & Poor's and Fitch downgraded it to "junk" status last year because of its large macroeconomic imbalances and lack of policies to address them.
It also said the economy could contract by 5.7 percent this year, facing a "difficult recession" on faltering exports and high interest rates.
However, it said Romania would avoid calamity due to "relatively low private sector debt and less reliance on foreign trade".
Like most of its neighbours, Romania slipped into recession this year as the world crisis slashed lending and consumption and forced it to secure 20 billion euros in IMF-led aid.
"The ratings would come under downward pressure if the IMF-EU financing programme unravelled due to implementation problems, or if there were signs that the EU was becoming less inclined to support," the agency said in a credit opinion note.
It rates Romania at Baa3.
Enforced structural reforms and stronger fiscal policies would likely lead to a rise in ratings, Moody's said.
Romania targets a budget deficit of 4.6 percent under local accounting standards, but most economists say a bigger shortfall is unavoidable as the crisis hits tax receipts. Moody's sees the gap at 6 and 4 percent in 2009 and 2010, respectively.