Fitch Ratings agency confirmed Romania’s sovereign rating at BBB- on Friday evening, the last step in the recommended investment category, but maintained a negative outlook, citing risks stemming from high budget deficit, increasing public debt, and political uncertainty.
The rating places the country’s government debt at the last step in the investment grade category, but Bucharest avoids being downgraded to junk with this occasion.
A downgrade would have placed Romanian bonds in the "junk" (speculative) category and would have led international funds to withdraw capital from the country and significantly increase borrowing costs. In practice, interest rates for citizens would have risen, consumer and mortgage loans would have become more expensive, there would have been an exodus of investors from Romania, and the leu would have rapidly depreciated against the euro.
"Maintaining Romania in the recommended investment category is an important outcome at a time when every political and budgetary decision is closely monitored by markets and rating agencies.
The data presented by the Ministry of Finance show that the adjustments are yielding results: the cash deficit has been reduced to 2% of GDP in the first semester, and Fitch estimates a 5.9% deficit for 2026, below the Government's target. The negative outlook indicates that political stability, continued reforms, and adherence to the fiscal-budget trajectory remain important criteria," stated Finance Minister, Alexandru Nazare.
Fitch: Deficit decreases but remains among the largest in the BBB category
The agency estimates that Romania's budget deficit will decrease to 5.9% of GDP in 2026, below the Government's assumed 6% target and significantly lower than the 9.3% level recorded in 2024.
The Ministry of Finance indicates that in the first semester of 2026, the cash deficit has been reduced to 42 billion lei, equivalent to 2% of GDP, compared to 70 billion lei in the same period last year.
Fitch appreciates that the improvement in budget execution is supported by revenue growth and cost control, including measures taken to limit salary and social benefit costs.
The report also highlights the role of European funds in financing investments and reducing the need for external borrowing. According to the agency, funds from the cohesion policy, PNRR, and the European SAFE mechanism contribute to maintaining investments and diversifying sources of financing during the fiscal adjustment period.
The agency warns of political risks
In the analysis published on Friday and cited by News.ro, Fitch states that Romania's main strengths remain its EU membership, access to external financing, GDP per capita level, and governance quality, superior to other countries in the same rating category.
However, these advantages are offset by high fiscal and current account deficits, still high inflation, increasing public debt, and an increasingly fragmented political climate.
"The negative outlook reflects the deterioration of public finances due to large – albeit decreasing – fiscal deficits and the increasing share of government debt in GDP. Political uncertainty has increased following the collapse of the four-party government, and the resolution of the situation remains unclear," the Fitch analysis states.
The agency warns that the lack of a stable government reduces visibility into the fiscal strategy post-2026 and delays the implementation of reforms assumed through the PNRR, with the risk of losing EU funds.
Furthermore, Fitch estimates that deficit reduction will slow down after 2026 and warns of the risk of fiscal relaxation ahead of the 2028 parliamentary elections. According to estimates, the deficit is expected to reach approximately 5% of GDP in 2028.
Public debt could exceed 64% of GDP by 2028
According to Fitch, public administration debt will continue to rise and could reach 64.5% of GDP by 2028, up from 59.3% at the end of 2025, surpassing the average of comparable states in the BBB category.
The agency also warns that twin deficits – budget and current account – keep Romania dependent on external financing and exposed to changes in financial markets.
Nazare: The priority is to return to a stable outlook
The Finance Minister stated that authorities must avoid political deadlocks and measures without budget coverage to maintain investor confidence.
"I rely on the responsibility of all political forces and state institutions to avoid deadlocks and initiatives without coverage that could compromise the effort made so far. Our priority is to protect Romania's rating, reduce financing costs, and build the premises for returning to a stable outlook," stated Alexandru Nazare.
Fitch specifies that the main risk to the rating is the inability to continue fiscal consolidation and stabilize public debt, especially in the case of prolonged political deadlock. Conversely, steady progress in reducing the deficit and growing confidence that public debt will be stabilized could prompt the agency to improve Romania's outlook from negative to stable.