Romania's position has significantly improved abroad over the last 18 months, reads a survey drawn by rating agency Fitch IBCA at the end of last December.
Tighter fiscal and monetary policies and faster domestic currency depreciation led to a decrease in the current account deficit, down to 1.3 billion dollars (3.8% of GDP).
Evolutions registered over the first nine months of 2000 show that the current account deficit will see only a minor increase over the entire year.
Moreover, NBR official reserves improved and reached 2.1 billion dollars, 2.9 billion dollars together with gold reserves, after the peak of foreign debt payment at the middle of 1999.
Residual foreign debt payment is easier to manage this year. Romania has entered again the international capital markets last year, when it launched two bond issues.
Although ties with the IMF are still strained, with recurrent lags in funds release, Romania no longer seems likely to encounter difficulties regarding payment of the medium-term foreign debt.
The GDP increase, backed by exports rise, is posting real positive rates for the first time over the last three years. Under such circumstances, Fitch IBCA has upgraded Romania's long-term hard currency-denominated debt from B- to B.
On the other hand, Romania needs sustained structural reform in order to keep making progress. Romania still holds one of the lowest sovereign rates granted by Fitch IBCA, as it is deemed as vulnerable to intern and foreign shocks.
According to Fitch IBCA, Romania's shortcomings are the slack financial control on state-owned companies, the inefficiency of reforms aimed at public finance sustainability, the red tape, which impedes investments and the high probability of social clashes occurrence if industrial restructuring speeds up.
Presuming that fiscal and monetary policies are implemented in a strict manner and the oil price retains the same level, Fitch IBCA forecasts that the inflation rate is likely to go down, but the 25% target is difficult to reach unless restrictive salary policies are enforced.
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