S&P maintains Romania’s rating in the “investment grade” category, but keeps the outlook negative due to fiscal and political risks

S&P has maintained Romania in the investment grade category in its latest assessment of the country, but has kept the outlook negative. The decision reflects the progress made in fiscal consolidation and the absorption of European funds, but also the risks generated by political instability and the difficulty of implementing budgetary measures in 2027-2028.

S&P estimates that the budget deficit will fall to 6.25% of GDP in 2026, approximately 1.5 percentage points below the 2025 level. Public investment, largely supported by European funds, remains the main support for the economy. The absorption rate of PNRR funds has exceeded 90% for grants and 95% for loans.

Finance Minister Alexandru Nazare welcomed the maintenance of the rating, but warned that the result is not sufficient. The priorities are meeting the deficit target for 2026 and adopting a credible budget for 2027.

The agency warns that the political deadlock and delay in forming a government supported by a majority could undermine deficit reduction. Net public debt could exceed 60% of GDP in 2027, while interest expenses could reach 3.3% of GDP in 2028. The outlook could be stabilized if Romania reduces its deficits and adopts a credible fiscal plan, but the rating could be downgraded if the adjustment fails or external pressures intensify.