International rating agency Fitch said it expected the near-term impact of the political crisis in Romania on the public finances “to be limited.” It admitted political uncertainty could remain high in the near term, but does not expect the crisis to lead to snap elections.

Fitch argued that the fiscal performance has been strong this year, with a deficit of RON 22 billion (1% of GDP) in 1Q26, about half the size of the deficits in 1Q25 and 1Q24.

Fitch also argued that even in the absence of a new government, a caretaker administration could continue implementing the 2026 budget, which targets a 6.2% of GDP deficit, narrower than 7.7% in 2025.

The risks seen by Fitch are related to the visibility of the consolidation beyond 2026, and with the absorption of RRF money this year.

The rating agency warned that the political crisis has further reduced visibility on the fiscal strategy in 2027, when a Social Democrat (PSD) candidate had been expected to take over from Ilie Bolojan, and in 2028, the next election year.

Fitch also warned that delays in meeting reform milestones could jeopardise EU disbursements under the Recovery and Resilience Facility. 

These funds – amounting to 1.8% of GDP, comprising EUR 4.6 billion in grants and EUR 2.7 billion in loans (figures do not include the fourth payment of EUR 2.6 billion in grants, reportedly green-lighted) – are seen by Fitch as “a crucial source of financing and stimulus through public investment this year, given domestic economic weakness. GDP contracted by 1.7% year on year in 1Q26.”

Weak private consumption and the spillovers from the Middle East conflict of higher energy prices and lower eurozone growth mean Romania’s 2026 growth will likely be significantly below Fitch’s 1.1% forecast at its February rating review.

iulian@romania-insider.com

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