Alexandru Nazare: there is no risk to the payment of pensions and salaries at this time

The Finance Minister, Alexandru Nazare, declared on Thursday that Romania has "serious arguments" for maintaining its country rating, as a new assessment is due to take place in the coming period. The official noted that rating agencies consider the deficit targets set for this year to be achievable and that, at present, there is no risk to the payment of pensions and salaries.

Nazare spoke about the effects of political instability on the economy, the depreciation of the leu, rising interest rates at which the state borrows, and the risks associated with financing the budget deficit.

"Over the course of these four months during which we have been operating with a caretaker government, there have been several such moments, linked both to internal and external causes, and to the decisions of certain investors. What we hope is that, as soon as possible, this issue — specifically the problem tied to stability — will be one that Romania can announce it has resolved," the Finance Minister stated.

He added that the issue of political stability is being closely monitored by investors and creditors: "All institutional investors and our key creditors, with whom we have held discussions over recent weeks, are awaiting the same thing."

"We have serious arguments for maintaining the rating"

When asked how Romania would explain the political situation and the period of uncertainty in the context of the rating assessment, Nazare said that the discussion about instability is not new, but emphasised that the budget execution provides the authorities with arguments to put before the rating agencies.

"We have had this discussion over recent months — it is not a new one. We have issues related to instability to explain, but on the other hand, we have strong arguments that Romania's execution is on track, that the cash deficit and ESA targets set for this year are achievable, which all agencies acknowledge as such," the minister stated.

Nazare also said that the current situation differs from previous years, when there were larger discrepancies between the authorities' estimates and those of the rating agencies: "This is not something that was typical in previous years — the differences between our targets and those of the agencies were significant. This time, the agencies are confident that we can close the year with a cash and ESA deficit of 6.6%, which is the most important thing."

He concluded: "In practice, on the one hand we have certain things to explain, but on the other hand we also have serious arguments for maintaining the rating."

Interest rates have exceeded 7%

The minister was also asked about the rise in interest rates at which the Romanian state borrows, given that yields on 10-year bonds have surpassed 7%, as well as about the risks associated with this situation.