By Tasneem Brogger
March 10 (Bloomberg) -- Romania’s credit rating outlook was raised to stable at Standard & Poor’s after the government showed its commitment to fulfilling the budgetary terms of an international bailout.
The outlook on Romania’s BB+ credit rating was raised from negative, the ratings company said in a statement late yesterday.
“The outlook revision reflects our view of Romania’s sustained budgetary reform program and our belief that the government is likely to continue to comply with the International Monetary Fund and European Union standby agreement, thereby easing external financial pressures,” Standard & Poor’s credit analyst Marko Mrsnik said in the statement.
The economy of the European Union’s second poorest member is relying on a 20 billion euro ($27 billion) IMF-led bailout to finance its budget and current account deficits after the global credit crisis undermined its exports and investments. Parliament was turned its attention to passing a budget after President Traian Basescu appointed a government late last year, unfreezing the IMF loan and restoring international investor confidence.
Economic output contracted about 7.1 percent last year and may “recover slightly in 2010, thanks mainly to the recovery we anticipate in external demand,” the rating service said. Domestic demand “is likely to remain subdued,” S&P said.
The government wants to reduce the budget deficit to 6.4 percent of gross domestic product this year from 7.8 percent in 2009, a target it can reach if planned wage and pension reforms are pushed through, S&P said.