“We expect Prime Minister Mihai Ungureanu and his cabinet to serve until elections in the fall. Ungureanu’s public statements and choice of economy and finance ministers indicate that policies during this period are unlikely to deviate from the path prescribed by the IMF,” Moody’s said.
Romanian premier Emil Boc and his cabinet resigned early February in the wake of widespread protests against two years of fiscal consolidation efforts that raised tax rates, lowered public sector wages, and cut spending on social services. Boc was replaced by Ungureanu, whose cabinet members were voted in parliament last week.
The expectation of continued IMF/EU support and adherence to its policy conditions is credit positive as it will keep Romania’s fiscal metrics from falling victim to political uncertainty and continue providing a financing backstop while also alleviating market concerns about policy risks owing to the change in government, Moody’s said.
It said that meeting the performance targets set by the international creditors would “reassure the other source of debt refinance, specifically market investors, about the direction of Romania’s policies in an uncertain domestic and international environment.”