The ratings on Romania balance our view of the country's substantial economic growth potential and moderate general government debt against Romania's limited administrative capacity, relatively low prosperity and high, albeit declining, levels of external debt. In 2011, we expect the Romanian economy to emerge gradually from recession. In our view, growth will be muted in the short term owing to continued fiscal adjustment and household deleveraging, both of which will weigh on private consumption. Household borrowing in foreign currency stands at 65% of the loan book, and while the currency has stabilized it is still about 25% weaker in nominal terms against the euro compared with its peak in mid-2007. In our view, however, external demand should boost export performance.
