US
\nfinancial rating agency Fitch Ratings warns that the dissolution of the
\nRomanian government coalition might disrupt fiscal consolidation efforts. These
\nare critical for changing the ‘negative’ outlook that is currently associated
\nwith Romania’s ‘BBB minus’ rating. Fitch has repeatedly said that the evolution
\nof public finances is the main factor influencing Romania’s rating. The rating
\nagency also points out that political turmoil is a danger to the fiscal
\noutlook. <\/p>\n
\n
\n
\n
<\/p>\n
The
\nexecutive has planned ambitious reforms on revenues and expenditures to reduce
\nthe deficit below 3% of the GDP in 2024 from 9.3% in 2020. The ‘BBB minus’
\nrating currently assigned to Romania by Fitch is the last rating in the
\n‘investment grade’ category and a possible one-step downgrade would lead
\nRomania’s rating in the ‘junk’ area, below the recommended investment
\nthreshold.<\/p>\n
\n
\n
\n
<\/p>\n
Pundits
\nexpected the executive to come up with a unitary pay and pension bill by the
\nend of the year. Furthermore the government pledged to improve the tax
\ncollection system and curb the deficit in the VAT collection. <\/p>\n
\n
\n
\n
<\/p>\n
Shortly
\nupon Fitch’s warning, the Prime Minister has given assurances the reform
\nprogramme will continue in Romania and that the country relies on a higher
\nincome budget this time being able to curb the budget deficit. <\/p>\n
\n
\n
\n
<\/p>\n
We
\nrecall that Romania is presently facing a political deadlock after several
\nUSR-PLUS ministers have stepped down shortly after the Prime Minister’s
\ndecision to sack their colleague, Justice Minister Stelian Ion. Furthermore,
\nUSR-PLUS has tabled a motion to put pressure on the National Liberal Party to
\nsack the incumbent Prime Minister. <\/p>\n
\n
\n
\n
<\/p>\n
According
\nto the same sources, USR-PLUS enjoys support from the nationalist group AUR while
\nthe largest opposition group PSD seems to have nothing against the idea of
\ndismissing the incumbent Prime Minister. Fitch believes these political groups
\ncan muster enough votes to endorse a motion, which could make the president to
\nappoint a new Prime Minister and forge a new government. <\/p>\n
\n
\n
\n
<\/p>\n
Romanian
\npresident Klaus Iohannis could appoint Florin Citu once again in a bid to forge
\na minority Liberal government as it happened in 2019-2020, but two abortive
\nattempts at making a government might trigger snap elections. According to
\nFitch experts, it is still unclear how a PNL-led minority government or a
\nPSD-led government could be capable of promoting the politically-sensitive
\nreforms in healthcare, the country’s pay and pension system and justice. <\/p>\n
\n
\n
\n
<\/p>\n
Fitch believes the present political deadlock might further delay the
\nEuropean Commission’s approval of the National Recovery and Resilience Plan -
\nNRRP, which the Romanian government will be waiting for until the end of
\nSeptember. The agency’s next scheduled review of Romania’s rating is due on
\nOctober 22. <\/p>\n
\n
\n
\n
<\/p>\n
(bill)<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
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