The ratings on the Republic of Romania are 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. Policymakers would like to achieve single-digit inflation by year-end 2004, a difficult goal as inflation was a still-high 14.1% at year-end 2003 and averaged 17.7% in 2003. Further progress will be made easier 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 times, undermine Romania's image among foreign investors. These issues
