Fitch skeptical about Romanian government’s plan to cut spending

Nevertheless, Fitch has hailed the commitment of the government to keep salary raises and public spending under tight control, as avoiding sideslips of macroeconomic indicators could lead to a better rating perspective for Romania. Earlier this year, Fitch changed Romania’s outlook to negative, due to a worsening of the current account.

“The government can signal a tighter wage policy, by reducing public sector salary goals. However, I am skeptical about the government complying with this commitment,” said one of Fitch’s Directors, Andrew Colquhoun, quoted by the Reuters newswire.

Fitch’s estimates for Romania’s current account deficit for 2007 amount to 14 percent. Furthermore, the agency foresees the budget deficit at 3.5 percent of GDP in 2008, above the 2.7 percent estimates of the Romanian government.