The ratings on the Republic of Romania remain constrained by: Continued structural economic distortions. These are most notable in the state-owed energy sector, despite recent price adjustments. Still-sizable losses in this sector undermine the efficient allocation of resources and constrain Romania's increasingly dynamic private sector. The challenge of achieving further disinflation. Inflation has remained on a downward trend this year, but is estimated at a still-high 14.5% for year-end 2003. The pace of disinflation was slowed by necessary public sector price increases and drought early in the year. Further progress will be facilitated if income policies are applied more successfully and evenly across loss-making, government–owned companies. Governance issues. Strong vested interests, patronage, and corruption still pose some risk and, at
