June 2 (SeeNews) - Credit rating agency Standard & Poor's could decide to downgrade Romania's rating on Friday, due to the country's deteriorating finances, Austria-based banking group Erste said on Tuesday.
"There is a non-negligible risk of a downgrade, due to the deteriorating fiscal situation. A meaningful correction of the budget deficit is needed in 2021 to avoid a rating action following the change of the outlook to negative in December 2019," Erste said in a research note.
At the end of last year, Standard & Poor's revised the outlook on Romania to negative from positive because of rising fiscal and external deficits, while maintaining rating at BBB-/A-3.
Large spending deviations by the previous government have forced Romania's current leadership to revise up its fiscal targets for 2019 and 2020, against the backdrop of a slowing economy, S&P Global Ratings said at the time.
In April, both Moody's and Fitch revised their outlook on Romania to negative from stable, while affirming the country's Baa3 and BBB- ratings, respectively.
Also in April, Romania's finance ministry said that the consolidated budget deficit will rise to 6.7% of GDP this year, up from original projections for a gap of 3.59%, due to additional expenses related to the coronavirus crisis.
(1 euro=4.8419 lei)