Outlooks on both ratings are stable.
S&P also affirmed its ‘BBB+’ transfer and convertibility assessment and the ‘3’ foreign currency recovery rating on the eastern European country.
“The ratings on Romania balance our view of the country’s substantial economic growth potential and moderate general government debt against its limited administrative capacity, relatively low prosperity and high, if declining, levels of external debt,” S&P said in a statement.
It estimated a modest economic growth in 2011, followed by a more robust expansion in the coming years.
“In our view, growth will be muted in the short term owing to continued fiscal adjustment and household deleveraging, both of which will weigh on private consumption,” S&P said. “External demand should, however, provide a positive boost to corporate investment and exports,” it added.
The ratings agency expects Romanian government will continue to consolidate its public finances, in line with its targets agreed with international partners, while a new EUR5 billion precautionary loan should minimize the risk of fiscal slippage ahead of the 2012 elections.
However, if the government fails “to adhere to its fiscal consolidation and structural reform strategy, or should Romania’s external deficits widen significantly without improving the country’s long-term growth potential,” the ratings could come under negative pressure, S&P warned.