BUCHAREST, Feb 2 (Reuters) - Fitch Ratings raised Romania's outlook to Stable from Negative on Tuesday, citing a narrowing of its external shortfall and a resumption in aid disbursements from the International Monetary Fund.
The move is the first positive move from ratings agencies since Fitch downgraded Romania to "junk" at the height of the world crisis.
A political crisis last year heightened market jitters, but the new centrist government appointed in late December after a hotly contested presidential election has passed an austere 2010 budget which helped revive a stalled IMF deal.
"The passing of a contractionary 2010 budget and expected resumption of Romania's IMF/EU funding ... has significantly reduced fiscal and external financing risks," the agency said in a statement.
The leu currency firmed slightly after the announcement, trading at 4.0850 per euro at 1539 GMT, compared with 4.0895 before the statement release.
"The outlook improvement will raise foreign investors' confidence in the Romanian economy which will have a positive impact on the leu currency, interest rates, yields," said ING Bank Romania chief economist Nicolaie Alexandru-Chidesciuc.
He also said he expected Standard and Poor's to mirror the move by Fitch, but added a rating improvement is much more likely to come next year once fiscal tightening measures bear fruit.
"For now, all we have is the government's promise to enforce tightening fiscal measures," he said.
Fitch has simultaneously affirmed Romania's Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'BB+' and 'BBB-' respectively. Romania's Country Ceiling and Short-term foreign currency IDR are affirmed at 'BBB' and 'B' respectively.
Romania is rated 'BB+' with a negative outlook by S & P, while Moody's rates Romania above junk at 'Baa3' with a stable outlook. Romania and Latvia are the only European Union states rated below investment grade.
(Reporting by Marius Zaharia and Luiza Ilie; Editing by Patrick Graham)