Fitch affirms Romania’s BBB- credit rating

However, the agency made it clear that Romania continues to face significant fiscal and political risks.

According to Fitch, the final rating decision differed from the initial recommendation of its rating committee after the Romanian authorities submitted additional information during the review process. Although the content of this information was not disclosed, Fitch continues to express serious concerns regarding the country’s ability to sustain fiscal consolidation beyond 2026, particularly in light of the parliamentary elections scheduled for 2028.

Political Uncertainty and Structural Reforms

Fitch notes that recent political developments have reduced visibility regarding Romania’s fiscal strategy beyond 2026 and have delayed key reforms linked to the European Union’s Recovery and Resilience Facility (RRF).

These delays increase the risk of Romania losing access to EU funding. Although the Romanian Parliament has approved four of the six key reforms required to unlock €5 billion in grants, the integrity law and the public sector wage reform remain outstanding. As a result, the country is expected to secure approximately €3.5 billion from the overall funding package.

Challenging Fiscal Consolidation

Fitch projects that Romania’s fiscal deficit will narrow to 5.9% of GDP in 2026, slightly below the government’s target of 6%, supported by improved budget execution and stronger investment activity during the second half of the year.

Nevertheless, the agency believes that the period beyond 2026 will present the greatest challenge. It expects the pace of deficit reduction to slow, while fiscal risks are likely to increase significantly as the 2028 elections approach, given Romania’s historical tendency toward pre-election fiscal loosening.

Weak Growth and Rising Public Debt

The economic slowdown is expected to further complicate fiscal consolidation efforts. Fitch forecasts that Romania’s economy will contract by 0.6% in 2026, despite higher levels of investment financed through European Union funds.

The agency subsequently expects a gradual recovery, with economic growth reaching approximately 2.3% in 2028, remaining below the 2.7% average projected for sovereigns rated BBB.

At the same time, Fitch forecasts that general government debt will continue to increase, reaching 64.5% of GDP by 2028, up from 59.3% at the end of 2025, thereby exceeding the projected BBB-rated sovereign average of 57.9% of GDP.

Higher Debt Servicing Costs

Fitch also highlights growing concerns over the increasing cost of servicing public debt. According to its projections, interest payments will rise to 9.3% of government revenues, compared with 8.0% in 2025, slightly exceeding the average for BBB-rated sovereigns.

Furthermore, the agency emphasizes that Romania’s public debt dynamics remain vulnerable to a potential depreciation of the Romanian leu, as approximately 53% of government debt is denominated in foreign currency, increasing exchange rate risks for the country’s public finances.