S&P Says Romania Ratings Unaffected By Coalition Split

„Despite a tense intra-coalition environment since the general elections in 2008 – and particularly ahead of the upcoming presidential elections – the government has so far successfully implemented the country’s IMF/EU program, which is reflected in the completion of the first review and subsequent disbursements,” the ratings agency said in a bulletin.

Romania has committed to tougher fiscal and economic policies in the public sector and pledged to lower budget spending, in a financial agreement with the International Monetary Fund, the EU and other international lenders, which provide around EUR20 billion.

S&P currently rates Romania’s hard currency debt at BB+ and its local currency debt at BBB-, both with negative outlook.

However, the agency warned about possible increasing pressure on rating downgrade in Romania if political instability should lead to blockage in fiscal and economic measures and public finances worsen.

Romania’s ruling coalition split Thursday, after leftist social democrat ministers resigned en masse to protest at the sacking of one of their Cabinet members.

Following the move, the democrat liberals in the Cabinet decided to cover for the vacant minister positions themselves until new ministers are appointed.