According to JCRA, the upgrade reflects the improvement in the financial system, mainly on the back of the progress on disposal of the non-performing loans in the banking system, the maintaining of the fiscal deficit below 3% of GDP in 2016 even with the impact of the tax cuts being taken into consideration, the perspectives of a sustainable economic growth as well as the low level of the public debt.
“The decision of the rating agency confirms the evolution and perspectives of the Romanian economy and, very important, the fact that budget deficit targets can be reached in the context of fiscal ease measures, taking into account the estimations of significant economic growth and revenue collection. In the context of the appreciations related to fiscal stability, the rating agency says it will further monitor the development of the law on debt discharge,” said Romanian Finance Minister Anca Dragu.
JCRA estimates the local economy will grow by around 4% in 2016 and 2017, given that Romania is the third largest economy in the Central and Eastern Europe with the nominal GDP of around EUR160 billion in 2015.
The agency also notes that the fiscal deficit had shrunk to an estimated 1.1% of GDP by 2015 while Romania has been enjoying stable capital inflows through foreign direct investment and the EU funds.
In January, Fitch Ratings affirmed Romania’s long-term foreign and local currency issuer default ratings (IDR) at ‘BBB-‘ and ‘BBB’, respectively, with stable outlooks.