Fitch has simultaneously affirmed the city’s short-term foreign currency rating at ‘F3’, also with stable outlook.
“The ratings reflect the city’s stable budgetary performance in the context of the supportive national policy framework for local governments as well as higher investment focus and uncertain economic conditions in both the European and national context,” the ratings agency said in a statement.
It said Brasov’s higher revenues supported by fees and state subsidies coupled with expenditure shift from operating to capital items ensured a sharp improvement in operating balances.
“The sustainability of operating revenue at its current historical highs is reliant on the strength of state subsidies,” Fitch said.
The rating agency said continued strengthening of the city’s self-financing and debt-servicing ability, combined with an improved macroeconomic environment could lead to a positive rating action in the future.
“Conversely, a prolonged deterioration in operating performance, eventually decreasing to below 15% from the current high 30% level, coupled with unexpected significant debt increases and/or a sovereign downgrade would prompt a downgrade,” the statement noted.