Fitch’s report on Romania
Romania's budget deficit will not be reduced by the percentages estimated at the start of the year, international financial analysts say.
Ştefan Stoica, 13.10.2025, 13:50
The coalition government in Bucharest is anxiously awaiting any assessment or signal coming from rating agencies. The reason is simple: a downgrade of the country’s rating would place Romania in the category not recommended for investors, and this would make loans much more difficult and expensive. The downgrade was avoided, thanks to the fiscal and budgetary reform measures taken in a first phase by the government. However, there is no reason for enthusiasm, because Fitch Ratings has revised its forecast regarding the evolution of Romania’s budget deficit. According to Fitch’s analysis published on Friday, the deficit is expected to go down this year to 8.5% of GDP, from a record of 9.3% of GDP last year, and, due to the high starting point, is expected to reduce in the coming years only to 7% of GDP in 2026 and 6.5% of GDP in 2027. Fitch says the upward revision of the budget deficit forecast following the analysis highlights the challenges Romania faces in halting the deterioration of public finances and in implementing sufficient consolidation measures to reduce large fiscal deficits and stabilize debt over the medium term.
“Additional fiscal measures may face implementation challenges amid consolidation fatigue, muted growth and lingering political uncertainty”, Fitch experts say. According to the budget revision of October 1, this year’s deficit will be 8.4% of GDP, compared to 7% as forecast in the February budget. The main adjustments will be operated on the expenditure side, increasing by 1.6% of GDP estimated by Fitch, mainly in higher interest payments, as well as in social assistance and healthcare spending. Fitch analysts believe that this budget revision shows that Romania’s overall fiscal deficit will decrease by only 0.3%, despite the initial spending freeze announced in January 2025 by the former government and the fiscal package introduced by the new coalition in July, the impact of which was initially estimated at 1.1% of GDP.
“This underscores the challenges from social spending pressures, higher borrowing costs and sluggish growth to achieving deficit reduction consistent with government debt stabilisation over the medium term”, Fitch’s analysis shows. The rating agency emphasizes that reducing deficits and stabilizing debt are crucial conditions for lifting the “negative” outlook associated with Romania’s “BBB minus” country rating. “Given the magnitude of the deficit and the multi-year consolidation process, a key challenge is to strengthen fiscal policy credibility, especially after repeated revisions to fiscal targets in 2024, which saw the budget deficit rise from an initial target of 5% to an actual 8.7% in cash terms. The additional packages should underscore the government’s broad commitment to deficit reduction”. (VP)
