Fitch affirms Romania’s fragile rating and warns of significant risks to medium-term fiscal consolidation

International rating agency Fitch affirmed Romania’s fragile rating at BBB- with a negative outlook, on the verge of the non-investment area, while signalling significant risks to medium-term fiscal consolidation.

Risks to medium-term fiscal consolidation are generated by weak growth, implementation challenges, fiscal fatigue, and tensions within the four-party government coalition. In more concrete terms this refers to the sluggish economic performance highlighted by the technical recession in H2 last year and modest growth ahead in the next couple of years, failure to legislate key bills such as that on public administration, social tensions caused by the fiscal consolidation relying on austerity measures, and political turmoil plus expected political volatility once the ruling coalition approaches the prime ministership transfer.