Financial assessment agency Standard&Poor's (S&P) has changed Romania's rating outlook from "stable" to "positive", taking into account the pledge by the Tariceanu government to speed up economic and institutional reforms with a view to strengthening Romania's chances of joining the EU in 2007.
Standard&Poor's places Romania's country risk at the BB+ level, one notch below the minimum level for the group of countries with low investment risk.
The upgrade is likely to take place during the following 12 months, provided there is no slide-back at a macroeconomic level.
Bulgaria was granted investment grade by S&P as early as the summer of 2004.
The agency has highlighted that the improved rating outlook is constrained by institutional weaknesses, external imbalances, the low level of economic welfare and the large sector of loss-making state-owned companies that still exist despite some progress.
"We expect the new government to keep its pledge on proceeding with institutional reforms and taking further action to create a friendlier business environment for investors," says Moritz Kraemer, an analyst with S&P.
He says that raising the rating to the level of "investment grade" will depend on the extent to which the new government is capable of turning the political targets it has announced into tangible results at the level of economic reform and transparency.
"Maintaining a cautious policy mix and including a prudent taxation policy will be a necessary condition of the upgrading over the next 12 months," added the S&P analyst. razvan.voican@zf.ro
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