Romania's finance minister talks fiscal consolidation with S&P and Moody's

Romania's minister of finance, Marcel Bolos, participating in the 'IMF/WB Constituency Meeting 2024', announced that he discussed "strategies to secure macroeconomic stability" with experts from the rating agencies S&P and Moody's.

Romania's sovereign rating is at the lowest level in the investment-grade area, and the twin deficits - particularly the fiscal consolidation - are the key element followed by the rating agencies.

"In the context of the working visit to Washington, I had very constructive discussions with the rating agencies S&P and Moody's about Romania's economic particularities and the strategies we will approach to ensure macroeconomic stability. [...] In this context, I emphasized our firm commitment to structural reforms and responsible fiscal policies. Our plans aim at fiscal consolidation, increasing investments in infrastructure and education, stimulating private investments, as well as promoting efficient and transparent economic governance. These initiatives will contribute to increasing economic competitiveness and creating a favorable environment for sustainable investments," the minister of finance wrote on his Facebook page.

Minister Bolos recently made controversial statements about Romania's fiscal consolidation, which needs around seven years to meet the 3%-of-GDP deficit target and has to be deferred to 2025 because of the elections organized this year.

He also supported the government's rhetoric about the benign character of the deficit aimed at supporting investments – an argument criticized by the head of the Fiscal Council.

The Fiscal Council expects a budget deficit of over 6% of GDP this year, compared to the government's 5%-of-GDP target.

Moody's and S&P are more optimistic, projecting fiscal gaps of 5.7% and 5.9% of GDP, respectively, this year, but the European Commission sees Romania's public deficit "to be closer to, if not above, 7% of GDP this year."