Fitch initially planned to downgrade Romania, central bank advisor says

Romania's sovereign credit rating remains at 'BBB minus' with a negative outlook, but the danger has not passed, according to Eugen Rădulescu, an advisor to the National Bank of Romania (BNR) governor. Fitch Ratings had initially intended to downgrade the country's rating but decided to postpone the action for several months after receiving further information from the Romanian government and the BNR.

Rădulescu stated that the decision to maintain the current rating does not signify that the threat has subsided. Instead, he warned that the risk is now greater than before. He explained that the reduction in the budget deficit was primarily achieved through tax increases, not through necessary structural reforms. The advisor highlighted a significant issue of "rent extraction" from the public sector, citing the large number of cases closed due to statutes of limitations, allowing perpetrators to retain illicit gains.

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This means that the initial decision had been to downgrade Romania, but as a result of the additional information presented by the Government and the BNR, they changed their decision and gave us a few more months. Not only has the danger not passed, but it is greater than it was before.

The BNR advisor also criticized energy policies, arguing that price freezes and a lack of investment in storage capacity have made the energy system more vulnerable. These statements follow Fitch's announcement on Friday, which confirmed Romania's rating but noted the decision was influenced by supplementary data provided by Romanian authorities. Rădulescu emphasized that without structural reforms, the country's economic stability remains precarious.

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There is a phenomenon of rent extraction from the public sector on an incredibly large scale... We have 10,000 lawsuits where the prosecution has been terminated because the statute of limitations has expired, and the perpetrators have remained well and good with what they have plundered.