Romania avoids credit downgrade risk, but danger not over yet (minister)
Romania received a very good signal from the European Commission following the government's pledging responsibility for the fiscal package and thus reducing the risk of the country having its sovereign rating downgraded, Finance Minister Alexandru Nazare said on Tuesday.
'There can never be a 100 percent certainty (that we are safe from downgrading - Ed. note), but there's a high degree of certainty, given that the message we sent by adopting the package goes hand in hand with the Commission's message, which practically confirms that we are headed in the right direction, to which we also add the adoption of the fiscal trajectory recommendation that was made in today's ECOFIN meeting; all these three elements represent a strong signal to all three rating agencies, especially for the first one that begins its assessment on July 15. I believe that as concerns the imminent danger of our credit rating being demoted, we got a very good signal. I don't believe that the assessments conducted in August - September still entail the risk of Romania being downgraded,' Nazare told broadcaster Digi 24.
In his opinion, Romania needs to constantly keep up its ambition not only of maintaining its rating, but also to increase it, so that financing conditions for the public and private sectors are increasingly accessible.
The Finance minister stressed that according to the excessive deficit procedure, Romania will be under the monitoring of the European Commission and will have to report twice a year - in April and October - on the macroeconomic situation and that of the budget execution.
At the same time, he indicated that a consolidated working dialogue with the European Commission has been resumed, which sends out 'a positive signal, a ray of hope, in the sense that the relationship with the Commission will function much better.'
'It is a necessary step, but it is not sufficient, that is, we have avoided this imminent danger, but we still have a lot of work to do in order to return to where we should have been, that is to a reference interval of 3%, as are many other states which manage their public finances in a much more credible way,' emphasized the Finance head.
In his opinion, for this the government must continue implementing the measures in Package 2, but it also has to impose public finance discipline that must cover not just local and central authorities, but all state-owned companies as well, 'so that when we report the targets for October or April next year, Romania's situation is much improved and this is visible in figures and hard facts, because only in this way can we create trust.'
Asked whether painful measures will not be needed every year until 2030, when the budget deficit target must be reached, Nazare replied: 'It is very difficult to anticipate now what will happen in a year or two.'
'What I can tell you instead is that if we are consistent over a period of up to one year and a half - which, in my point of view, is how long the difficult times will last - and if we adopt these measures of budgetary financial discipline, we will make a turnaround by the end of next year. Of course, it very much depends on many other developments. This is a target. (...) It is essential what the private economy will do and how we will manage to facilitate private investments, attract new investments and use the little money we have much better, because up until now, we had a lot of funds and now we don't have it anymore. We have less fiscal space and we have to do more with less money, but we must help the private sector, not throw sand in its wheels, and respond much faster to investment requests,' the Finance minister said. AGERPRES (RO - writing by: Mariana Nica; EN - writing by: Simona Klodnischi)
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