In December 2024, Fitch Ratings downgraded Romania’s rating to junk status and revised Romania’s outlook to negative. This means that Romania’s rating is at the last investment grade and any downgrade will lead to a withdrawal of investors and money from our country.
According to Fitch, after years of fiscal slippage and eroded fiscal policy credibility, the next government will face the complex challenge of undertaking a broad, multi-year fiscal consolidation process in a context of modest growth prospects and domestic political fragmentation.
Bucharest Mayor Nicusor Dan, a pro-EU centrist independent, defeated right-wing populist George Simion in the second round of the presidential election on May 18, 2025. Talks are currently underway among Romania’s pro-EU political parties to form a new government. The previous pro-EU coalition collapsed in early May 2025, after just four months in office, following Simion’s first-round victory.
Nicusor Dan’s victory reduced the short-term risks of a prolonged period of heightened political uncertainty, potentially accompanied by financial market turmoil. However, it remains to be seen whether policy effectiveness will improve, given the fragmentation of the legislature and the heightened social polarization highlighted by the presidential elections (Simion, whose AUR party is the second largest in parliament, won the first round with 41% of the vote), Fitch also notes.
Developments this year are broadly consistent with Fitch’s previous view that political uncertainty will remain elevated at least until the presidential elections are rescheduled after last year’s cancellation, and that the extension of the electoral cycle will delay further fiscal consolidation measures until at least the second half of 2025, as we noted when we affirmed Romania at “BBB-”/Negative on 21 February.
The new president and the future coalition parties have acknowledged the magnitude of the fiscal challenges. Media reports indicate that agreeing on consolidation plans is an urgent priority in their coalition negotiations, and that Nicusor Dan said a realistic deficit target for 2025 is 7.5% of GDP. Romania’s seven-year medium-term fiscal-structural plan, agreed with the EU, targets a deficit of 7% of GDP in 2025.