S&P Affirms Romania at BBB- With Negative Outlook Amid Political Deadlock

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S&P Global Ratings has affirmed Romania's long- and short-term sovereign credit ratings at 'BBB-/A-3', maintaining a negative outlook as ongoing political instability threatens the country's fiscal trajectory. Despite political deadlock following the collapse of the coalition government in May, Romanian authorities passed ad-hoc legislative measures to secure over 90% of the country's Recovery and Resilience Facility allocations through September, bolstering a public investment budget of 8.5% of GDP for 2026 even as real GDP is projected to contract by 0.5%. S&P warned that failure to form a durable government could derail medium-term fiscal targets under the European Union's excessive deficit procedure, and legislative paralysis has already cost the nation €750 million in forfeited RRF grants due to the inability to pass a unified public wage law. Romania's fiscal deficit is projected to narrow to 6.25% of GDP in 2026 from 7.9% in 2025, though net general government debt is expected to reach 60% of GDP by 2027, with the 10-year bond yield hovering around 7.4%. S&P expects growth to rebound to 2.25% in 2027, partly supported by the scheduled launch of the €4 billion Neptun Deep offshore gas project, while double-digit core inflation keeps average HICP at 8.3% for the year.

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