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Country Risk Service Romania Updater

  • ID: 2101378
  • Country Profile
  • April 2017
  • Region: Romania
  • 22 Pages
  • The Economist Intelligence Unit
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The score for sovereign risk has improved by 3 points, leading to an upgrade to the BBB rating band. The 2016 budget deficit came in below target, at the equivalent of 2.8% of GDP (ESA 2010), as a result of capital spending restraint. The Economist Intelligence Unit forecasts an increase in the budget deficit in 2017, to 3.3%, putting Romania in breach of EU fiscal rules. We expect fiscal tightening in 2018.

On average the leu depreciated in nominal terms by 1% against the euro and by 1.3% against the US dollar in 2016, resulting in a real effective depreciation (measured against a trade-weighted currency basket) of 1.7%. External and domestic policy risks are likely to weigh on the leu in 2017, when we expect a further modest real depreciation. There is a risk that continued strong nominal wage growth will undermine competitiveness.

The banking sector risk score has improved by 3 points. The ratio of non-performing loans to total loans has declined sharply, from 21.9% in December 2013 to 9.5% at end-2016, and is expected to fall further in 2017, aiding modest growth in new lending, having contracted in 2016. Local subsidiaries of Greek banks account for 12% of banking assets, but have strong capital-adequacy ratios to protect depositors.
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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 2017-21: Political stability

Central scenario for 2017-21: Election watch

Central scenario for 2017-21: International relations

Central scenario for 2017-21: Policy trends

Central scenario for 2017-21: Fiscal policy

Central scenario for 2017-21: Monetary policy

Central scenario for 2017-21: Economic growth

Central scenario for 2017-21: Inflation

Central scenario for 2017-21: Exchange rates

Central scenario for 2017-21: 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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