Romania has made progress in implementing reforms under the agreement with the International Monetary Fund (IMF), but still faces risks due to the pace of budgetary consolidation, according to Fitch Ratings, quoted by Mediafax newswire.

“The situation is improving, but there are still significant risks”, said Douglas Renwick, director of Fitch Ratings for Europe, Middle East and Africa. Risks include a slowdown of reforms and external financing, the analyst said, adding that this is one of the reasons Romania's rating stays below the recommended level of investment.

Under the agreement with the IMF, the Romanian government implemented harsh reform measures, like public sector wage cuts and the VAT increase from 19 to 24 percent. With a new preventive agreement with the IMF, growth is expected to return to the Romanian economy, which could have a positive influence on ratings. Romanian authorities must reduce the budget deficit to 3 percent of GDP by 2012.

Fitch and Standard&Poor's rated Romania with “BB+”, while Moody’s rating of “Baa3” is a stable outlook. According to Douglas Renwick, Romania's outlook is stable, and Fitch will monitor developments this year.

Irina Popescu, irina.popescu@romania-insider.com