After the Fitch rating agency revised Romania’s economic outlook from stable to negative, the main responsible politicians quickly took the stage – the Prime Minister (PSD) and the Finance Minister (PNL).
Neither of them took any responsibility; both just tried to downplay the effects and made a few unconvincing promises for improvement.
The revision of Romania's economic perspective could lead to an increase in the interest rates at which the Government borrows on financial markets, but it could also affect investment interest, as economists have predicted, but the political factor does not seem impressed.
Meanwhile, today, the Bucharest Stock Exchange dropped after Fitch's announcement. The BET index depreciates by almost -2%.
Here are the statements of the two, which require no further comments
Marcel Ciolacu:
- Romania is going through turbulence caused by political instability and the cancellation of the presidential elections.
- Only together will we stop these uncertainties by creating a pro-European majority and a new government that will implement the reforms and investments from the PNRR and the Structural Budget Plan committed at the European level.
- Romania has the capacity to mobilize all resources to return to a stable path. This must happen by the end of this year.
- We have gone through economic, health, energy crises, and the one triggered by the border war together. I am firmly convinced that we will overcome this period in solidarity.
- Romania has automatic stabilization mechanisms, and we have the capacity to mobilize all available resources to return to a stable path.
Marcel Boloş
- We have a negative perspective that somehow signals the current period we are going through, generated by the fragmentation of decisions in Parliament and the formation of the Government, which are the guarantees for us to take measures for fiscal consolidation.
- We remain in the BBB minus rating category, and, of course, this must be followed by fiscal-budgetary consolidation measures to maintain the stable perspective we had before this crisis generated at the political level:
- Currently, we are working on the "little train" Ordinance and there we see what financial resources we have.
- The recalculation of pensions is a commitment. Wait for the "little train" Ordinance.
Causes and What's Next
The Fitch rating agency revised Romania's economic outlook from stable to negative (IDR - long-term debt area).
In a statement, Fitch presents the "high-weight" factors that led to the decision to revise the perspective, with "political uncertainty" ranking first, followed by the budget deficit that will cause the external debt to explode. Also mentioned are fiscal slippages and unsustainable expenses along with the increases in pensions and salaries in the public sector.
The next scheduled Fitch rating review for Romania was in February 2025, but the agency believes that the country's developments justify such a deviation from the calendar.
Meanwhile, negotiations continue with some tensions for the formation of the new government: A new meeting is taking place today, with USR also participating.