Fitch upgraded Romania' outlook for long term loans in foreign currency Fitch Ratings ugraded Romania's outlook for long-term foreign currency loans to 'BBB minus,' the short-term rating to 'F3,' the long-term domestic loans to 'BBB' and the country ceiling to 'BBB plus.'

A release from the financial rating agency reads that Romania's outlook is included in the 'investment grade' category, namely low risk for investment. The prospect for long-term ratings is stable.

Expert Ed Parker said that “The upgrade is an evidence of Romania's progress in the process of recovery after the effects of the world financial crisis, visible in the GDP growing once again, the solid export performance and the lower budget deficit. On the whole, there is a palpable lower risk associated to Romania, representing a comeback to an 'investment grade' type of rating.”

The recovery of the Romanian economy started in early 2011 by a 1.6 percent higher GDP on an annual basis, after one of the longest recessions in the EU. The revival is due to the solid export performance, while the local thinning demand contributed to the necessary adjustment of the current account deficit to 4.2% of the GDP in 2010 compared to 11.6% in 2008.

However, Fitch warns, there are risks incurred by the financial sector, where the non-performing loans are on the up, reaching 13% in late April 2011, although fears are somehow allayed by the relatively high rate of the capital adequacy ratio of 14.9% and by the proper level of provisions.

(Sourced from Bloomberg)