Fitch Ratings said on
Fitch said in a statement it now affirms the long-term foreign and local currency issuer default ratings (IDR) at 'BB+' and 'BBB-', respectively. The issue ratings on the senior unsecured foreign and local currency bonds have also been affirmed at 'BB+' and 'BBB-', respectively, while the short-term foreign currency IDR has been affirmed at 'B' and the country ceiling at 'BBB'.
"Prolonged recession continues to impair the prospects for fiscal consolidation and public debt sustainability, while the government has displayed markedly less appetite for hard budget constraints than some of its central and east European peers, opening up a policy credibility gap," the agency said.
It underlined that the additional fiscal slippage in 2013 was confirmed with the general government deficit widening to 5.5% of GDP from the 3.8% of GDP target of 3.8%. Furthermore, little fiscal consolidation is envisaged before 2015, Fitch said.
It added the gross general government debt probably reached 60% of GDP at end-2013, and "the agency does not expect it to peak before 2016 at the earliest" - considering fiscal financing needs are expected to remain high at over 18% of GDP in 2014 and 2015.
The agency added that the Excessive Deficit Procedure (EDP), which the EU opened for
The EU set deficit targets of 4.6% of GDP for 2014, 3.5% of GDP for 2015 and 2.7% of GDP for 2016, consistent with an annual improvement in the structural balance of 0.5% of GDP in 2014, 0.9% of GDP in 2015 and 0.7% of GDP in 2016.
The government already announced the revenue and expenditure measures it is going to implement to meet the EDP goals and a revised budget should be sent to parliament by end-February. The measures include plans for transferring of funds from the second to the first pension pillar and retention of state-owned companies' profits.
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