Fitch: Political turmoil puts at risk fiscal consolidation in Romania
The collapse of Romania's coalition government could disrupt fiscal consolidation efforts, which are key to resolving the negative outlook on Romania's BBB- rating, Fitch rating agency says in a note sent on September 7, after the junior ruling partner USR-PLUS pulled out of the government leaving the liberal party (PNL) without majority support in parliament.
Political turmoil clouds (former) coalition's ambitious reform agenda and the fiscal outlook, the rating agency says.
The government had planned ambitious expenditure and revenue reforms to reduce the deficit to under 3% of GDP in 2024 from 9.3% of GDP in 2020.
Romania is expected to send a medium-term fiscal consolidation strategy to the European Commission in October.
Fitch's next scheduled review of Romania's rating is due on October 22.
In response to the note sent by Fitch on the political context in Romania and its impact on the fiscal policies, prime minister Florin Citu promised to address the concerns expressed by the rating agency.
"I will explain to them that the reform program goes further; we will show that we have higher revenues in the budget [and that] the budget deficit can be reduced. We stick to the calendar," replied PM Citu, quoted by Ziarul Financiar.