Fitch skeptical about Romanian government’s fiscal discipline

BUCHAREST (Reuters) – Fitch Ratings welcomed yesterday the Romanian government’s pledges to keep a tight grip on public spending and wage rises but said it remained skeptical over Bucharest’s ability to follow them through. «We should wait for developments on this,» Andrew Colquhoun, a director with Fitch Ratings, told Reuters. He added the agency will keep economic developments under close review. «The government can signal a tighter wage policy by reducing the public sector wage settlement. However, I would be skeptical if the government actually follows through on those commitments.» Last week, Fitch cut its outlook on Romania to negative from stable, citing the risk of an abrupt economic slowdown due to its large current account deficit. «(If) the government and the national bank do agree on a policy to spread out the burden of taking some of the steam out of Romania’s overheating economy, that would be very helpful,» Colquhoun said. He also said he expected Romania’s budget deficit to reach 3.5 percent of GDP in 2008.