{"id":11458,"date":"2026-08-10T07:00:27","date_gmt":"2026-08-10T07:00:27","guid":{"rendered":"https:\/\/ofero.news\/?p=11458"},"modified":"2026-08-10T07:00:27","modified_gmt":"2026-08-10T07:00:27","slug":"moodys-affirms-romanias-sovereign-rating-sees-risks-of-slower-fiscal-consolidation","status":"publish","type":"post","link":"https:\/\/ofero.news\/?p=11458","title":{"rendered":"Moody\u2019s affirms Romania\u2019s sovereign rating, sees risks of slower fiscal consolidation"},"content":{"rendered":"

International rating agency Moody\u2019s on August 7 affirmed Romania\u2019s fragile Baa3 sovereign rating, along with its negative outlook, linked to\u00a0high implementation risks\u00a0<\/em>related to the country\u2019s ambitious multi-year fiscal consolidation programme. Compared to a year ago, the fiscal deficit narrowed faster than expected, but there is less clarity on further steps towards a sustainable deficit, the rating agency concluded.<\/p>\n

Just like Fitch a week before, Moody\u2019s signalled that the political consensus on fiscal consolidation beyond 2026 emerged as the key driver for further rating actions, despite the fiscal consolidation having outperformed expectations so far.<\/p>\n

While Romania managed to reduce the deficit somewhat more quickly than Moody\u2019s expected in its September 2025 country update, the rating agency assesses political conditions as more challenging following the passage of the no-confidence vote against the government in May.\u00a0<\/p>\n

The rating agency remarks that political fragmentation has delayed the formation of a new government, but expressed expectations that a new administration will take office after the summer break.<\/p>\n

Moody\u2019s says that passage of a deficit-reducing 2027 budget before the end of 2026 and of an adequate public wage law would signal political consensus in favour of implementing and maintaining a large fiscal effort beyond 2026. The outlook could return to stable if it is clear that such a political consensus still exists in favour of implementing and maintaining a large fiscal effort beyond 2026.<\/p>\n

Conversely, \u201ca political and policymaking environment that is unlikely to be conducive to sustaining a large fiscal effort over a number of years\u201d would exert negative pressure (prompting a downgrade to non-investment region).\u00a0<\/p>\n

Separately, the rating agency notes risks stemming from geopolitical risk emanating from the war in Ukraine or any other developments that could jeopardise the funding of the country\u2019s wide current account deficit, with a negative impact on its rating.\u00a0\u00a0<\/p>\n

Technically, Moody\u2019s expects Romania’s 2026 headline deficit to decline significantly to 5.8% of GDP this year, down over two percentage points in one year, thanks to expenditure restraint and revenues holding up in spite of challenging macroeconomic conditions.<\/p>\n

Despite the slightly faster-than-expected deficit reduction, the rating agency expects Romania’s interest burden will still increase in the coming years given high financing needs and the prevalence of market-based funding. Interest costs will increase to 3.3% of GDP in 2028 from 2.8% of GDP in 2025, up from\u00a0 2.0% of GDP in 2023.\u00a0<\/p>\n

As a result of still elevated primary deficits and rising interest costs, Moody\u2019s expects the debt burden to continue to increase, albeit at a slower pace than it anticipated at the time of its last rating committee in September 2025. Just like Fitch, Moody\u2019s projects debt will increase to 64.5% of GDP in 2028 (above the projected peer median of 57.9%) from 59.3% in 2025. The rating agency\u2019s current baseline assumes a gradual further reduction in deficits that stabilises the debt burden at around 66% of GDP by the end of this decade.<\/p>\n

(Photo: Roman Tiraspolsky\/ Dreamstime<\/a>)<\/em><\/p>\n

iulian@romania-insider.com<\/em><\/p>","protected":false},"excerpt":{"rendered":"

International rating agency Moody\u2019s on August 7 affirmed Romania\u2019s fragile Baa3 sovereign rating, along with its negative outlook, linked to\u00a0high implementation risks\u00a0related to the country\u2019s ambitious multi-year fiscal consolidation programme. Compared to a year ago, the fiscal deficit narrowed faster than expected, but there is less clarity on further steps towards a sustainable deficit, the […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-11458","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/ofero.news\/index.php?rest_route=\/wp\/v2\/posts\/11458","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ofero.news\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ofero.news\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/ofero.news\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11458"}],"version-history":[{"count":0,"href":"https:\/\/ofero.news\/index.php?rest_route=\/wp\/v2\/posts\/11458\/revisions"}],"wp:attachment":[{"href":"https:\/\/ofero.news\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11458"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ofero.news\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11458"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ofero.news\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11458"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}