We believe that if the pension hike will stand, Romania will have bitten off more than it can chew, fiscally speaking.Standard and Poor’s statement, cited by Reuters
This is the statement issued by Standard & Poor’s and cited by Reuters. The statement regards the pension hike voted by the Romanian Parliament recently. In August, Fitch said the level of pension hike could affects country’s rating.
In fact, the center-right Government, supported by a Parliamentary minority, approved only 14%, while the center-left Parliamentary majority voted for a 40% increase of the pensions.
This decision, if stands, meaning if it will be promulgated as a law by the Romanian president, could increase the budgetary deficit up to 10%, according to S&P’s specialists. Also, this level could stay that high for two years.
S&P will confirm or change the rating for Romania in early December and pension hike could lower the current BBB- rating further more.