Fitch warns Romania's fiscal outlook clouded by post-collapse political turmoil

Fitch Ratings confirmed Romania’s sovereign rating at BBB-/A-3 in a scheduled review, but retained a negative outlook due to the country’s political instability after the collapse of a broad pro-European coalition in May. The absence of a new government creates uncertainty over fiscal strategy beyond 2026 and threatens the timely adoption of reforms required for the EU’s Recovery and Resilience Facility, potentially jeopardising those funds.

The agency highlighted that the budget deficit fell to 2% of GDP in the first six months, a sharp improvement, yet it still expects the full-year deficit to reach 5.9% of output, slightly above the 6.2% target under local accounting. Fitch warned that further deficit reductions are at risk from implementation difficulties, socio-economic costs of additional measures, and political considerations ahead of the 2028 parliamentary elections.

It also projected a modest contraction of 0.6% for the Romanian economy in 2026. The rating action followed an appeal by the Romanian authorities that led to a different outcome than initially anticipated.