Rating agency Moody’s has improved to stable from negative the outlook on Romania’s credit rating, which is confirmed at the lowest grade above non-investment area - Baa3 (comparable with the ratings of BBB- from Fitch and S&P).

Yet, the upgrade is just a mere confirmation that the country is not facing a crisis deeper than the one in 2008/2009 – when Moody’s still avoided placing it in the non-investment area. Romania continues to wait for S&P to restore its rating to the pre-crisis level after Fitch did it already in 2011 (and Moody’s has not downgraded it at all during the recession period).

Moody’s move was driven by expectations of further improvement in the country’s macroeconomic fundamentals and by the recovery in the euro area that reduces risks to Romania’s growth. The recent Eurobond launched successfully at 3.7% on one hand, and the enhanced anticorruption fight on the other, might have consolidated the agency’s projections in regard to the country’s future economic performances.

Moody’s explains the outlook upgrade by i. improvement of fiscal and C/A balance and ii. lower risk to growth and balance of payments following improved outlook in the euro area. The fiscal consolidation pursued despite the political volatility and the C/A deficit narrowing to just 1.1% of GDP last year were particularly outlined. The uncertainty in the euro area is mentioned as a key driver also, as the improvement in the country’s main trade partners was already visible in Romania’s own macroeconomic performance last year.

Keeping the country in the current rating class is explained by i. sustainable growth, but potential growth below pre-crisis level [impaired by unlikely credit expansion] and ii. the government’s finances being still exposed on near term to exchange-rate risk and international financial volatility. While this prevents further upgrades soon, the country’s demonstrated ability to pursue fiscal consolidation and the assistance under the agreements with multilateral institutions prevents downgrades either, the agency explains.