The credit rating agency Standard & Poor’s, or S&P, reconfirmed Romania’s “BBB-/A-3” rating for long- and short-term debt while maintaining a negative outlook in its latest review published on July 24.
The agency noted that the recent fiscal measures meant to reduce the deficit, which it describes as Romania’s most substantial attempt at fiscal correction since the 2008 global financial crisis, are a positive step. However, it notes that economic and political challenges may undermine the government’s ambitious policy agenda. Specifically, S&P highlights the end of 2026, when the current, reform-driven prime minister, Ilie Bolojan, must hand over the office to a Social Democrat.
“Prime minister Bolojan’s mandate will cease at the end of 2026 as part of a power-sharing arrangement with the PSD (whereby he is required to transfer his position to a coalition partner). This clouds the outlook on the reform agenda and fiscal policy beyond 2026, especially ahead of the next parliamentary elections in late 2028,” S&P notes.
At the beginning of the year, the agency worsened Romania’s rating outlook from stable to negative and confirmed the “BBB-” rating. Now, S&P announces that it has confirmed the “BBB-/A-3” ratings for long- and short-term debt, both in foreign and local currency, granted to Romania, maintaining a negative outlook. It also mentioned the ongoing risks to public finances despite the fiscal consolidation measures announced by the new government.
According to the rating agency, the new government has implemented fiscal measures with an impact of 1.1% of GDP in 2025 and 3.5% of GDP in 2026. These measures are expected to reduce the deficit to below 7.7% of GDP this year and to 6.4% in 2026, compared to 9.3% in 2024.
S&P notes that this fiscal correction is taking place amid significant economic challenges. In this context, the agency has reduced its GDP growth projections to 0.3% in 2025 and 1.3% in 2026, reflecting the impact of consolidation measures on an already slowing economy. It is also noted that inflation remains among the highest in Central and Eastern Europe and is expected to rise to around 9% in the coming months due to increases in electricity prices, VAT hikes, and other factors.
“Despite the narrowing headline deficits, government debt, net of liquid government assets, will continually rise over the next few years, exceeding 60% of GDP by 2027,” the analysis states.
“Standard & Poor’s assessment validates the fact that budgetary discipline is not only necessary but also possible, and represents an important signal that international markets recognize the stabilization and fiscal reform efforts of the current government,” said Romanian finance minister Alexandru Nazare.
The “BBB-” rating is the last step in the investment-grade category. Countries with this status are considered relatively safe for investments, a positive sign for Romania’s debt-servicing efforts. Falling below it, however, would make any loan taken by the government come with increasingly high costs.
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