Fitch Ratings: Euro zone accession remains a ‘remote prospect’ in Romania and CEE

Newsroom 11/04/2016 | 18:01

Fitch Ratings, the credit rating agency, says in a new report that Romania’s adoption of the euro would have an intermediate effect.

However, the analysts reckon that any discussion regarding the accession into the Euro zone has lost its importance in all CEE countries.

According to Fitch, the biggest beneficiaries of euro membership would be Croatia and Bulgaria, while the Czech Republic and Poland would likely benefit least. Romania is in the same category with Hungary.

“However, euro membership remains a remote prospect as it has disappeared from the political agenda in all the six countries,” said the analysis.

Romania’s target for joining the Euro zone is 2019, according to political statements. Economists say that the country is already meeting mandatory convergence indicators such as debt-to GDP ratio and long-term interest rate. However, the GDP per capita remains below the EU average, and economists say that Romania could attempt to adopt the euro after 2020, with the economy in a stronger position.

“Hungary and Romania would lose the benefits of independent monetary policy. Euroisation in the two countries is also more limited than in Bulgaria and Croatia, although in Hungary government debt in euros is high (23% of GDP). Given both countries’ sizeable net external debt, the adoption of a reserve currency would strengthen external finances in both. Romania’s low government debt would leave the country with some policy flexibility and Hungary’s open economy would benefit from reduced transaction costs,” said the agency.

Ovidiu Posirca

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