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Country Risk Service Romania Updater Product Image

Country Risk Service Romania Updater

  • Published: August 2014
  • Region: Romania
  • 23 Pages
  • The Economist Intelligence Unit

The sovereign risk score has improved by 2 points, but the rating remains unchanged, at the upper end of the BB band. Despite improving fundamentals, the possibly negative implications for next year's deficit target of recent election-related fiscal measures caution against an upgrade just now. Public debt has risen since the crisis, but remains low at 38.4% of GDP (ESA 95 definition) at end-2013, and is not expected to rise much above 40% by 2015.

Improved economic fundamentals have led to a more positive external assessment and increased capital inflows, resulting in leu appreciation. However, in the short term the leu may be subject to volatility owing to political uncertainty before the presidential election in November. Pressure on the currency may arise from renewed euro zone turbulence or an escalation of the Ukraine-Russia crisis. Satisfactory progress with the IMF stand-by programme will help to mitigate investor concern, but a lack of agreement on key issues such as tax cuts may unsettle markets.

A central bank probe into reporting of bad debt caused a sharp rise in the ratio of non-performing loans (NPLs) at end-2013, and this will remain high in 2014. Deleveraging has intensified ahead of euro zone stress tests later this year.

Country Risk Service Romania Updater

Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk

Definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk

Central scenario for 2014-18: Political stability

Central scenario for 2014-18: Election watch

Central scenario for 2014-18: International relations

Central scenario for 2014-18: Policy trends

Central scenario for 2014-18: Fiscal policy

Central scenario for 2014-18: Monetary policy

Central scenario for 2014-18: Economic growth

Central scenario for 2014-18: Inflation

Central scenario for 2014-18: Exchange rates

Central scenario for 2014-18: External sector

Key risk indicators

Ratings summary

Quarterly indicators

International assumptions summary

Economic structure

Public finances

Exchange rates, interest rates and prices

Financial sector

Current account

International liquidity

Foreign payment and liquidity indicators

External trade

External financing requirement

External debt stock

External debt service

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