It remains to be seen if policy effectiveness will improve in Romania, given a fragmented legislature and increased social polarisation highlighted by the presidential elections, Fitch Rating agency writes in a post-elections update that doesn\u2019t seem to capture the latest developments on the government formation.<\/p>\n
The fiscal plan currently under negotiations among parties to form the new coalition is seen by the rating agency as a primary indicator for the next policies and, therefore, plays a key role in the sovereign update expected for this autumn.<\/p>\n
The fiscal consolidation measures that emerge from a coalition agreement will provide a first opportunity to assess in detail how and how fast the next government plans to reduce the deficit in 2025 and 2026.<\/p>\n
\u201cProspects for reducing record-high deficits and stabilising rapidly rising public debt remain central to our assessment of Romania\u2019s sovereign rating following last month\u2019s presidential elections,\u201d Fitch Ratings\u2019s update reads.<\/p>\n
Romania\u2019s public indebtedness, historically below average, has recently converged to the BBB median, according to the rating agency.<\/p>\n
Romania\u2019s public debt is rated at BBB-\/negative, and the first negative action would push it into the non-investment grade with an impact on the availability of foreign financing.<\/p>\n
Fitch\u2019s next scheduled sovereign rating review is due on August 15. The assessment of the likely impact of the next government\u2019s consolidation plans will be incorporated into the updated fiscal forecasts, alongside any changes to our GDP and other macroeconomic projections.<\/p>\n