Romania May Regain "Investment Grade" Rating By '10 - BCR

Romania could regain its status of “investment grade” by 2010, in an optimistic scenario, if it meets the conditions of the financial multilateral agreement with the International Monetary Fund and the European Commission, analysts of Romania’s largest lender BCR said Tuesday.

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“An improvement in the country’s rating is less probable in 2009 due to foreign mistrust in Romania’s ability to reduce the budget deficit close to 3%,” BCR said in its “Romania – Macroeconomy Digest Quarterly” report.

Romania will send a very negative signal to the international markets if the 2009 budget deficit is higher than in the previous year and drifts away from the Maastricht criteria, BCR analysts said.

Romania’s consolidated budget deficit was at 9.4 billion lei (EUR1=RON4.1605), or 1.78% of the gross domestic product, after the first four months of 2009, up from 1.5% of the GDP at the end of March, according to governmental sources.

According to the cash methodology used by Romanian authorities, the budget deficit was at 4.9% of the GDP in 2008 and is seen at 4.6% of the GDP in 2009, a level already agreed with the International Monetary Fund.

Last fall, both Fitch and Standard&Poor’s lowered the sovereign ratings on Romania by two notches, below investment grade, citing vulnerabilities in the emerging markets, spurred by the global crisis.

Romania agreed end-March with the International Monetary Fund, the E.U. and other international lenders a EUR19.95 billion financial package to help it cushion the effects of the financial crisis. The IMF's Executive Board approved Monday the two-year stand-by agreement with Romania worth EUR12.95 billion.

The agreement with Romania was approved Monday by the IMF's Executive Board.

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