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Investing.com -- S&P Global Ratings has affirmed Romania’s ’BBB-/A-3’ long- and short-term foreign and local currency ratings, maintaining a negative outlook.
The rating agency cited ongoing risks to Romania’s public finances despite fiscal consolidation measures announced by the new government led by Prime Minister Ilie-Gavril Bolojan.
The government, which took office following the election of Nicosur Dan as president in mid-May, has implemented fiscal measures with an impact of 1.1% of GDP in 2025 and 3.5% of GDP in 2026. These measures are expected to reduce the deficit to below 7.7% of GDP this year and to 6.4% in 2026, down from 9.3% in 2024.
S&P noted that the fiscal correction occurs amid significant economic challenges. The agency has lowered its GDP growth projections to 0.3% in 2025 and 1.3% in 2026, reflecting the impact of consolidation measures on an already slowing economy.
Inflation remains among the highest in Central and Eastern Europe and is expected to rise to around 9% in the coming months due to electricity price increases, VAT hikes, and other factors. This presents a challenge for the National Bank of Romania, which will likely maintain current monetary policy despite economic slowdown.
Current account deficits are projected to remain wide, averaging 7.5% of GDP through 2028, though fiscal tightening is expected to partially reduce these imbalances.
The new government’s fiscal correction and reform agenda should help unlock approximately €44 billion in EU funds, representing over 12% of estimated 2025 GDP, which will support economic growth and help finance external deficits.
Despite narrowing headline deficits, government debt net of liquid assets is projected to exceed 60% of GDP by 2027, with interest expenditure forecast to average 8.7% of government revenue between 2025 and 2028.
S&P warned it could lower Romania’s ratings if fiscal consolidation deviates significantly from expectations or if external debt increases beyond current assumptions. Conversely, the outlook could be revised to stable if external and fiscal deficits narrow substantially, supported by economic growth.
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