Romania must reduce its current account deficit and trade balance deficit to improve the country’s rating, Finance Minister Adrian Caciu said on Saturday.

The minister’s reaction came after rating agency Fitch reaffirmed Romania’s sovereign debt rating at BBB-/F3 for long-term and short-term foreign currency debt and changed the country’s outlook from negative to stable.

“If we want to improve the rating, we have one important thing: to reduce the current account deficit and the trade balance deficit. Obviously, with the preservation of the other pillars, which I spoke about above and which confirm a responsible approach. I can tell you that if the trade and current account deficits were decreasing (and not increasing), then today we would have announced an increase in the country’s rating! However, the reduction of the trade deficit is carried out not only by the efforts of the government. Actions, programs and, above all, a partnership with the economic environment are needed, which, through investments, ensures the transition to a productive economy. The so-called economic productivity, which should become the national economic goal of Romania in the next 4-6 years,” the Minister of Finance wrote on his Facebook page, according to Agerpres.

According to the cited source, Fitch’s decision is even more important in the current regional context, in which recessionary pressures are still observed, determined by the uncertainty caused by the development of the conflict in Ukraine, but especially by the impact of inflation on the economies of European states, as well as by the difficulties that have arisen in supply chains.

Adrian Cachiu believes that political stability is the most important pillar of the rating, which has given rise to the improved rating outlook.

“The reduction of the state deficit also contributed to the improvement of prospects”

Another element that was important for this decision was, according to the Minister of Finance, the stabilization of the share of public debt in GDP. “After years of real failure in Romania’s public debt ratio and especially its deficit management (in less than 24 months from November 2019, Romania managed to achieve the counter-result of increasing the public debt to GDP ratio (12 percentage points), 2022 year returned Romania to the right, responsible and, above all, predictable trend,” the quoted source explained.

Fiscal-budgetary consolidation and the reduction of the state deficit, together with the approach to consolidation through the fiscal adjustment of budget revenues, also contributed to the improvement of the forecast, the head of the Ministry of Finance also noted.

“Regarding the deficit of the state budget, it should be noted that it includes, especially in the monetary part, all elements of one-time intervention (support measures aimed at the population and the economy, taken to compensate for the fall in purchasing power), so that the level of the deficit is affected by these cyclical measures support From a macro perspective, as well as correlation with or impact on other indicators (such as a reduction in structural inflation), the deficit that matters is a structural deficit, and its reduction has a positive effect on other factors that affect the smooth running of the economy.” Adrian Cachiu added.