Fitch: Braşov needs to borrow less in the coming years

Fitch ratings firm last year revised its ratings for the Mayoralty of Braşov from negative to stable and affirmed its ratings for long terms loan denominated in foreign currencies and in lei to "BB+/BBB-", to reflect the balance of its budget and the fiscal adjustment to its current difficult economic climate. The rating for short term loans was affirmed at "B".

According to a press release of the evaluation agency "the revision of our outlook reflects the balancing of the budget and the adjustment of taxation to a difficult climate as well as the expectations of Fitch that the city will improve its medium term financial stability with operational margins over 10%". Under these circumstances, "the affirmation of the rating takes under consideration the high degree of debt of the city and the difficult economic climate on a regional and national level ".

The aforementioned press release, states that the city"s operating margin recovered from last year"s levels, backed by the funds disbursed by the government, which upheld the stability of its revenues, and by the curbing of spending. However, under the current circumstances, strict control of operating expenses is required if the financial performance of the city is to improve.

The city of Braşov had direct debts of 179.8 million lei at the end of 2009, which are exposed to the risk of fluctuating interest rates and to foreign exchange risk, due to variable interest rate and to the fact that 46% of its debt is denominated in Euros. The city should borrow at a lower rate in the 2010-2012.