The international rating agency Moody’s considers that the formation of a new government and the adoption of the budget for 2027 by the end of the year are positive developments for Romania, which could support further reduction of the budget deficit.
However, the agency warns that the adjustment of public finances remains challenging, as the state must cope with increasing expenses on interest, salaries, and defense.
The assessment is presented in a commentary published on Tuesday by Moody's, as presented by the Ministry of Finance.
The deficit is expected to decrease, but more slowly in 2027
Moody's maintains its estimates regarding the reduction of Romania's budget deficit from 7.9% of GDP in 2025 to 5.8% in 2026 and 5.5% in 2027.
The agency also anticipates a decrease in the primary deficit, which excludes interest expenses on public debt, from 2.7% of GDP in 2026 to 2.3% in 2027.
According to the evaluation, the formation of a new executive would allow the adoption of the budget for next year by the end of 2026, which would contribute to maintaining Romania's fiscal policy credibility.
Moody's believes that political stability and the existence of a credible budget are essential, especially as Romania needs significant loans, and financing from international markets has become more challenging.
Nazare: We cannot afford new slip-ups
The interim Minister of Finance, Alexandru Nazare, argues that Moody's assessment highlights the need to continue measures to reduce the deficit.
"Moody's message should be read primarily as an argument for responsibility and continuity. Romania has made progress in correcting budget imbalances, but we are not at the end of this process and cannot afford to lose, through new slip-ups, what we have managed to correct with so much effort," said Nazare.
The minister warns that the budget for next year will represent an important test for Romania's financial credibility.
"The 2027 budget will be a major credibility test: it must be built on realistic revenues, clear priorities, and expenditures that the state can effectively support. Given the high financing needs, budget discipline is not an option but a condition to protect the country's credit rating, maintain creditor confidence, and sustain Romania's ability to finance its development," the Finance Minister conveyed.
Increasing pressures on the budget
Moody's points out that Romania must simultaneously manage multiple pressures on public spending. These include the increase in payments for interest on public debt, personnel expenses, and the additional funding needed for defense.
The agency also emphasizes the importance of structural reforms necessary to stabilize public debt and maintain it at a sustainable level.
The Ministry of Finance states that in preparing the budget for 2027, it will focus on controlling public expenditures, improving revenue collection, and protecting the investments necessary for economic development.
Romania remains on the last step before "junk"
The commentary published on Tuesday by Moody's does not represent a new rating decision, the Ministry of Finance specifies. Romania retains its Baa3 rating with a negative outlook.
Baa3 is the last step in the recommended investment category. A downgrade by one notch would place Romania in the speculative category, also known as "junk."
The negative outlook indicates a risk of downgrade, without implying that such a decision is inevitable.