The fall of the coalition government led by Ilie Bolojan could complicate discussions on reducing the budget deficit for next year, warned the financial rating agency S&P on May 6. It is the first of the three major rating agencies to send a message after the government was dismissed through a no-confidence motion in Parliament – but the first agencies to review Romania’s rating are Fitch (July 31) and Moody’s (August 7). 

S&P will review Romania’s sovereign rating only in October – unless an ad-hoc update becomes necessary following outstanding developments.

According to S&P, cited by Reuters, Romania's commitment to reducing the budget deficit requires new fiscal consolidation measures in the coming years. 

S&P Global Ratings' downgrade warnings for ​the credit ratings of Hungary and Romania ‌reflect the fiscal risk facing the two emerging European countries, the ratings agency told Reuters ​on May 6.

The collapse of the coalition government in Romania could complicate budget ​discussions for 2027, said Karen Vartapetov, ​Lead Analyst for CEE & CIS Sovereign Ratings at ​S&P Global Ratings.

"This is important as ​Romania’s ⁠commitment to cut fiscal deficits implies additional consolidation measures in the coming years," he said.

Indeed, the budget measures enacted in December 2024, July 2025, and gradually in the last months of 2025 and the first months of 2026 secure robust fiscal consolidation until 2026, but not much afterwards. The freezing of the pensions and wages in the budgetary sector, one of the key measures that secured the fiscal consolidation in 2025-2026, ends in January 2027. At the same time, the external financing under RRF, potentially reaching EUR 10 billion (2.5% of GDP) this year, will no longer be available from 2027 on.

In addition, the situation in the region is not very good either, given the impact of energy prices on the economy, as well as the costs of support measures, S&P warned in its note. 

Separately, the minister of finance, Alexandru Nazare, announced on May 6 that he had discussed with representatives of the financial rating agency Fitch Ratings on the political situation in Romania, presenting them with data on budget execution in the first quarter but also on the evolution of the PNRR.

iulian@romania-insider.com

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