Romania risks losing its recommended sovereign investment rating if it fails to significantly reduce the budget deficit and stabilize public debt, warns the financial rating agency Fitch.
The deficit reached 9.3% of GDP last year (according to the European ESA standard), up from 6.6% in 2023, and the state debt reached 54.8% of GDP, compared to 48.9% in the previous year.
Fitch emphasizes that the new government resulting from the presidential elections must take clear and rapid fiscal consolidation measures in a fragile economic context and with a fragmented political scene.
The agency notes in the warning cited by Profit.ro that the next evaluation of Romania's rating is scheduled for August 15, followed by those of Moody's and S&P in September and October.
All three major rating agencies currently maintain Romania at the lowest level recommended for investors, with a negative outlook.
According to Fitch, the new government faces a complex challenge: to implement a multi-year plan to reduce the deficit against the backdrop of weak economic growth and heightened political polarization.
Although Nicușor Dan's victory reduced short-term political instability risks, there are still questions about the effectiveness of government decisions, especially in the context of a divided Parliament and a tense social climate.
The European Commission estimates that without corrective measures, Romania's budget deficit will be 8.6% of GDP in 2025. Romania's medium-term fiscal plan, aiming for a gradual deficit reduction, sets a target of 7% for next year, in line with European requirements. Nicușor Dan stated that a realistic target for 2025 would be a deficit of 7.5% of GDP.
However, Fitch warns that recent economic data, including the stagnation of GDP in the first quarter of 2025, cast doubt on these objectives and indicate that larger adjustments than planned may be necessary.
The agency points out that measures announced so far, such as freezing salaries and pensions, are insufficient in the face of the rapid deterioration of public finances.
The fiscal consolidation resulting from the government formation negotiations will provide the first real opportunity to assess how seriously the new executive addresses the deficit issue. Fitch will incorporate updated economic projections and the impact of proposed policies in its mid-August analysis.
European funds remain a key factor for short-term economic growth and for improving the development potential of the Romanian economy.
Fitch's evaluation in August could significantly influence investors' perception, in a context where Romania is on the edge, just one step away from speculative grade (junk).