Ratings agency Moody’s has expressed concern over the current protests in Romania, sparked off by government plans to reform the healthcare system. Moody's' press release describes the protests as a "credit negative development" that could upset the Romanian government's planned reforms.

The ratings agency also commented on the healthcare reforms that caused the angry public backlash against the government. Moody's backs the International Monetary Fund (IMF) and the reform- the cutting back of public healthcare: "Reforming the healthcare system is part of an agreement made with the International  Monetary Fund, the European Union and the World Bank, and it underpins a EUR 5 billion emergency credit line the three organizations made available for the Romanian government.”

The Moody's statement is a reminder of the difficulties facing the government: trying to keep the IMF and the ratings agencies happy without committing political suicide with disastrously unpopular austerity measures. The consequences of politicians rebelling against the IMF have been seen in Greece and Hungary's cases.

Moody’s  points out that healthcare cuts are not the first unpopular austerity measure the Romanian Government has implemented in the past two years and that, in the opinion of those at the ratings agency, they are big steps towards reducing the government’s future liabilities.

"Romania has met all the conditions of the agreement, even when it required politically unpopular but credit positive measures such as cutting public sector jobs and wages, lowering social benefits and increasing the value-added tax. These efforts lowered the fiscal deficit from 9 percent of GDP in 2009 to an estimated 4.4 percent of GDP in 2011. Cutting healthcare costs would be the next step in reducing the government’s future liabilities,” the ratings agency statement goes on.

Moody's is one of the major credit rating agencies that kept Romania in the category of recommended investment rating throughout the financial crisis. Currently, Romania holds a "Baa3" with stable outlook, the last category recommended to investors.

Alex Camburu, alex.camburu@romania-insider.com, Liam Lever, liam@romania-insider.com