15.8 C
Bucharest
September 28, 2020
Valahia.News
Image default
Economy Finance International News Romanian News

Fitch: Level of Pension Hike in Romania Affects Country’s Rating

The amount by which Romania’s government will hike pensions in September and the level of political volatility are key to fiscal prospects for Romanian economy, Fitch Ratings said in a press release on Tuesday.

The rating agency appreciates the Government’s decision of increasing the pensions with only 14% instead of 40% as budgeted. Still, the Romanian law stipulates the pensions have to grow with 40% in September and, by refusing to abide by the law, the Government does nothing but fueling the resentment of the senior population. This could prove disastrous at vote, which is due in late September.

On the other hand, Fitch estimates a 14% pension hike would permanently increase expenditure by 1-1.2pp of GDP from 2021 onwards, whereas a 40% increase would increase annual spending by 4pp. The two scenarios are taken into consideration as the Opposition proposed a no-confidence vote against the government, and the rating agency appreciates a 40% increase is still possible if the government is ousted from power.

Related posts

Will Romania Ask for an IMF Deal?

Valahia.news

Why Romanians Will Avoid Greece from July 15 and Choose Turkey or Bulgaria

Valahia.news

The International Monetary Fund Estimates Romania’s Economy Will Contract by 5% in 2020

Valahia.news

Leave a Comment