ING: Romania Ratings May Be Upgraded On Budget Deficit Cut

„We (e.n. ING analysts) believe that a rating upgrade from Fitch or other rating agencies may come only after there are visible results that the fiscal measures are having an impact on reducing the budget deficit. As these may be seen only in late 2010 and/or early 2011, a rating upgrade is not likely before then. However, improvements in outlook are possible and likely until then,” ING said in a report Wednesday.

Tuesday, Fitch Ratings Tuesday revised Romania’s outlook to stable from negative, while affirming the country’s ratings, citing an improvement in external financial and economic conditions.

ING believes the outlook improvement may favor leu’s appreciation on the foreign currency market and may facilitate the interest rates decrease.

„Fitch’s decision is not a big surprise and it does not mean that a rating upgrade will follow. In our view, it actually means that a downgrade is less likely at this stage and that an upgrade may follow if fiscal policies agreed with the IMF succeed in lowering the budget deficit,” ING said.

Fitch said the adoption of the 2010 budget and the expected resumption of the International Monetary Fund-led EUR20 billion arrangement has significantly reduced fiscal and external financing risks and the threat of further macroeconomic instability.