S&P affirms Romania’s investment-grade rating, but also its negative outlook

International rating agency S&P on April 3 affirmed Romania’s BBB- sovereign rating, but also its negative outlook, sketching a scenario of steady medium-term fiscal consolidation for this year and beyond – which would keep the growth rate subdued this year (0.25%) but correct the external deficit in the coming years. Nevertheless, S&P warned of the social impact of the consolidation policies, aggravated by unexpected inflation caused by the Middle East conflict, prompting tensions within the four-party ruling coalition. It also expressed concerns related to the lack of follow-up measures to continue fiscal consolidation in 2027.

As regards the fiscal consolidation path, S&P expects the government coalition to make progress toward implementing its planned fiscal measures to bring the general government deficit to 6.5% of GDP in 2026 and 5.5% of GDP in 2027 compared with 9.4% of GDP in 2024.