Romania has avoided a junk rating as credit rating agency S&P Global Ratings affirmed the country’s long- and short-term sovereign credit ratings at ‘BBB-/A-3’, maintaining a negative outlook.
The decision on Wednesday reflects both recent progress on fiscal consolidation and the persistence of significant structural risks concerning the long-term sustainability of public finances.
S&P said the election of Nicușor Dan as President in May and the formation of the new pro-European government marked the end of a prolonged period of political instability.
The government has a solid parliamentary majority and easily passed an initial fiscal reform package, with an estimated impact of 1.1% of GDP in 2025 and 3.5% in 2026, focusing on both revenue increases and spending cuts.
S&P estimates that these efforts will reduce the budget deficit to below 7.7% of GDP this year and to 6.4% in 2026, down from a massive 9.3% in 2024.
However, the agency warned that medium-term fiscal strategy beyond 2026 remains uncertain, especially given that Prime Minister Bolojan is expected to step down in the future under the current political agreement.
The agency also cautions that public debt will continue to rise despite fiscal efforts, surpassing 60% of GDP by 2027, increasing Romania’s financing needs on international markets.
S&P has also made a significant downward revision of its economic growth forecasts for Romania: 0.3% for 2025 (down from 1.8%) and 1.3% for 2026 (down from 2.6%).
However, it noted that the fiscal policy and government reforms could help unlock EU funding, especially in strategic areas like energy transition, transport, and healthcare, which may support medium-term recovery.
Romania faces long-term challenges, such as an aging population and labor force emigration, which will negatively impact the country’s growth potential.
The next scheduled review of Romania’s rating is from Fitch Ratings on August 15.
All three major rating agencies – S&P, Moody’s, and Fitch – maintain a negative outlook for Romania, meaning the country could lose its investment-grade status.
