The Republic of Romania's real economy faces mounting risks due to high and rising private sector leverage and the related dependency on an increasingly uncertain external financing channel. Standard&Poor's Ratings Services believes policy makers have not addressed these growing economic challenges, partly because the policy focus had shifted to the 2008 general election, which intensified the generally antagonistic and uncooperative political environment. In the absence of any significant counter-cyclical policy measures, Romania's economy has been overheating and overleveraging, a process fuelled by high non-government credit growth. The associated rapid growth of domestic demand contributed to high wage pressures and a widening of the current account deficit to 14% of GDP in 2007 and somewhat lower in 2008, via
