BUCHAREST, Feb 13 (Reuters) - Romania's new government has taken positive steps towards repairing its loose fiscal policy but funding aid from the European Union or the IMF may be necessary to keep its rating, Moody's said on Friday.
Moody's is the only major rating agency to grade Romania investment grade, after Standard & Poor's and Fitch cut it to "junk" last year, largely because of concerns over inadequate fiscal policy response to external imbalances.
The agency said spending caps introduced by Bucharest's seven-week-old government remedied some of the previous cabinet's fiscal laxity.
But foreign help would be necessary to help plug the fiscal deficit and ensure an orderly economic slowdown.
"If they (government) have trouble negotiating a deal with the IMF or EU, we will be much more concerned," Kenneth Orchard, Moody's sovereign analyst told Reuters in an interview.
"A deal will give us the confidence necessary to maintain the country's rating."
Orchard said the outlook for Romania remained stable and reiterated his forecast for the Romanian economy slipping into recession this year, which is more bearish than the Reuters consensus forecast for 1.7 percent growth.
Moody's rates Romania's sovereign debt at Baa3. (Reporting by Marius Zaharia; Editing by Ron Askew)