Low public sector debt burden. Strong consensus in favor of EU membership, effectively locking in structural reform. High growth potential. Minimal budgetary flexibility due to large parastatal losses. Weak external liquidity, as external imbalances will persist over the foreseeable future. Weak governance indicators. The ratings on the Republic of Romania are supported by the improvement in general government fiscal indicators that has occurred on the back of buoyant domestic demand. GDP looks set to grow at almost 6% in 2005, with domestic demand expanding almost twice as rapidly. As a result, the general government deficit will reach 1.3% of GDP, despite a comprehensive tax cut associated with the introduction of the 16% flat tax in 2005, and additional spending pressures
