Radio România Internațional

Tag: financial rating

  • An outlook on the 2025 budget

    An outlook on the 2025 budget

    In a complicated economic context, where public debt has exceeded 54% of the GDP, and the budget deficit is approaching 9% of GDP, drawing up Romania’s 2025 state budget is no easy task. Especially since two of the main international rating agencies have downgraded the country’s rating from stable to negative. Based on a deficit of no more than 7% of the GDP, the draft budget is expected to be approved by the Government by the end of the week. The bill will then be submitted to Parliament for debate and approval. According to the document, authorities must first cut public spending. Thus, the budget of the Presidential Administration will reportedly be slashed by 10%, that of the Senate by 5%, and that of the Chamber of Deputies by 9%.

     

    The increase in pensions remains under debate, given that the Finance Ministry claims this will not be possible this year. Finance Minister, Tánczos Barna, says the 2025 draft budget, which many regard as moderate, ensures the payment of salaries and pensions and the development of settlements. “The budget stipulates the construction of highways for 20 million Romanians. The budget allots funds for the development of rural infrastructure for all Romanians. We have funds for all Romanians to pay salaries in Education, in the Ministry of the Interior, in all ministries that need to pay salaries, at the level of 2024. We have the proper funds to pay all pensions (…) at the value of November-December 2024, which will remain in place month by month throughout 2025”, the Romanian official pointed out. Minister Barna also mentioned that the budget of the Defense Ministry will be higher compared to 2024 and that the budgets of other ministries, such as the Environment, Health, Education and Transport, will also increase.

     

    To achieve more flexibility, personnel expenses will be reduced in each institution, most of them seeing their budgets slashed by 5%, with the exception of Education, hospitals or Internal Affairs. With respect to loans, Tánczos Barna said the authorities are considering all possibilities in order to cover the budget deficit. “Romania borrowed a lot last year, it will borrow less this year and even less next year. We have a roadmap for reducing loans year by year, over the course of seven years”, Tánczos Barna added. Fortunately, Romania’s downgraded rating did not also change its rating in terms of investor appeal, which would have increased Romania’s borrowing costs. According to experts, skepticism persists, however, among investors and rating agencies, as a result of political instability and delays in implementing structural reforms. (VP)

  • April 17, 2021

    April 17, 2021

    COVID-19 IN ROMANIA -
    3,474 new cases of COVID-19 infection have been reported in the last 24 hours,
    the Group for Strategic Communication announced on Saturday. During the interval,
    135 fatalities were also reported. 1,505 patients are currently in intensive
    care. A quarter of Romania’s counties remain in the red zone, reporting an incidence
    rate over 3 per thousand inhabitants. Meanwhile the vaccination campaign
    continues. People who want to get the AstraZeneca jab without an appointment
    can now do so. According to Prime Minister Florin Cîţu, Romania is expected to
    hit the 35% mark in early June in terms of the total number of people who’ve
    got immunized, which will allow for a gradual relaunch of the economy. The
    Prime Minister said herd immunity will be achieved when 70% of the total
    population gets immunized, which in Romania is tantamount to some 10 million
    people.


    RATING -
    Standard and Poor’s financial rating agency has confirmed Romania’s BBB- rating
    but improved its prospect from negative to stable. According to the Finance
    Ministry, this is the first positive evolution in Romania’s financial rating
    operated by this agency since November 2013. Standard and Poor’s says the
    stable prospect is indicative of the credibility of fiscal consolidation
    measures promoted by Romania. The agency also believes the Government’s planned
    reforms could create a more robust fiscal framework, thus limiting the risks of
    reversing fiscal consolidation policies, which would lead to an improvement in
    Romania’s rating.


    DIPLOMACY -
    Romania’s Foreign Minister, Bogdan Aurescu, hailed the decision of the EU High
    Representative for Foreign Affairs, Josep Borrell, to appoint Romanian Dan
    Steonescu as the head of the EU Delegation to Syria, headquartered in Beirut.
    The appointment comes as an official recognition at EU level of Romania’s
    expertise in the Middle East, as well as its diplomatic skills, Aurescu said.
    According to a Foreign Ministry release, stabilizing Syria is key to the
    security of the entire region, while stepping up efforts to solve the crisis at
    political level remains a priority for the EU and the international community.
    A career diplomat with a wide experience in the Middle East, Dan Stoenescu has
    served as Romania’s ambassador in Tunisia since 2017. In 2015-2016 he was
    Minister Delegate for Romanians Worldwide. He previously worked for Romania’s
    embassies in Madrid and Beirut. Another four Romanians are currently part of
    the EU delegation: Oana Popa in Montenegro, Denisa Ionete in Nigeria, Traian
    Hristea in Mongolia and Cristian Tudor in Kuwait.


    TENNIS -
    Romania is playing Italy in the playoffs of World Group of the Billie Jean King
    Cup. In the women’s singles, Irina Bara is today playing Martina Trevisan,
    while Mihaela
    Buzărnescu will take on Elisabetta Cocciaretto, while in the doubles Monica
    Niculescu and Elena-Gabriela Ruse will play Jasmine Paolini and Giulia
    Gatto-Monticone. Italy leads 2-nil after Friday’s matches, when Trevisan
    defeated Buzărnescu 6-2, 2-6, 7-6, while Cocciaretto defeated Bara 6-1, 6-4.
    Simona Halep and Patricia Ţig couldn’t play for Romania, both injured, while Camilia Giorgi,
    the best-rated Italian player, tested positive for COVID-19. The team that wins
    the playoffs will play in the World Group qualifiers for 2022, while the other
    team in Group 1 in the Euro-Africa Zone.


    HANDBALL – Romania are facing North
    Macedonia on Saturday in Bucharest in the first leg of the 2021 World
    Championship play-offs in women’s handball. The return match is due to take
    place on April 21, in Skopje. Commentators say booking a place should not be a
    problem, given that the number of participants grew to 32. The tournament will
    be hosted by Spain. Europe has 50% of the available places. Romania is yet to
    miss a women’s World Championship, where it has won four medals over the years:
    gold in 1962, silver in 1973 and 2005 and bronze in 2015. (V.P.)

  • Stable economic prospects

    Stable economic prospects

    The Standard & Poor’s (S&P) financial
    rating agency has reconfirmed the rating related to Romania’s government debt
    to BBB-/A-3 for the long and short term debt in local and hard currency as well
    as the stable outlook. Also S&P estimates that Romania’s economy will slow
    down even more this year, to stand at 3.5%, due to a more reduced external
    demand and a lower level of private investments. According to the agency, last
    year the growth rate of the GDP dropped down to 4.1% from the very high level
    of 7% reported in 2017, when the fiscal stimulation measures and the favourable
    external environment prompted Romania’s economic boom. For the period
    2020-2022, S&P expects a moderate growth towards a more sustainable level
    of 3% annually. The future growth trajectory will depend on the progress made
    in passing institutional reforms and on the rate of success of increased
    domestic investments, for instance by means of boosting the absorption of
    European funds, S&P also shows. In another move, S&P remarks an obvious
    propensity for immigration among young people, among the educated labour force
    as well as a gloomy prospect on the improvement of general life conditions. S&P
    warns that if the authorities don’t take action to bring the people in the
    Diaspora back home, they will not be able to ensure a more robust growth
    trajectory for the economy and a sustainable way of managing the dynamics of
    the population’s rapid aging.


    The agency also draws attention to
    the increasing fiscal pressure that will linger in the absence of corrective
    measures. The current account deficit will probably grow at almost 5% of the
    GDP, S&P writes. The national bank of Romania still enjoys a high
    credibility rate and the awaited amendments to the new banking tax will probably
    ensure the policies’ efficiency. S&P estimates that the general
    governmental deficit will deepen, going up to 3.3% to 3.5% of the GDP in 2019
    and 2020 respectively, as a result of a slowdown in economic growth and of
    government expenses, and against the backdrop of preparations for the 2019
    presidential election and the 2020 parliamentary elections. S&P’s decision
    to maintain the stable outlook for Romania is a fair one, which acknowledges
    and confirms the current economic realities of Romania, says Finance Minister
    Eugen Teodorovici. According to the finance ministry officials, Romania’s
    strengths underlying the S&P decision are the moderate level of public and
    foreign debt and the effort to maintain the economic growth prospects. The 2019
    budget law passed by the Romanian government and promulgated by president Klaus
    Iohannis is based on an economic growth of 5.5%, a 2.7% deficit and a GDP of
    almost 200 billion Euros.