Romania: Fiscal Pressures Rise Due to Domestic Political Uncertainty and

According to the government’s plan, general government debt-to-GDP would peak at 62.6% in 2029, up from 54.8% in 2024, and decline thereafter, which in Scope Ratings’ view is optimistic. Scope’s latest estimates, which incorporate expectations of weaker growth over 2025-26 and slower budgetary consolidation, show the debt-to-GDP ratio remaining on a steadily increasing trend, concluding a forecast horizon to 2030 at around 74%, double its pre-pandemic level.

Romania’s recent fiscal slippages were driven by inflation-related spending increases and lower-than-expected EU fund disbursements. The government plans to lower the fiscal deficit to 7% of GDP in 2025 primarily through cuts to current expenditure, including a freeze on public sector wages and pensions. The budget also assumes strong revenue growth, underpinned by robust real output growth and new taxes.

Domestic Political Uncertainty Weighs on Investor Confidence and Ability to Absorb EU Fund Inflows

Preserving a constructive dialogue and achieving the targets agreed with the European Commission are key to preserving economic stability, as this also ensures continued access to balance-of-payment assistance mechanisms in case of need. These facilities provide a backstop for the country’s external financing, having last been activated in 2009-11 (with additional precautionary programmes over 2011-15), so constitute an important insurance policy not available to non-EU sovereign peers.

In this context, the outcome of the presidential elections – with a far-right, nationalist candidate having won the first round this past weekend – and the credibility of commitments to fiscal consolidation and reform are crucial to Romania’s economic trajectory. High political uncertainty, after the previous presidential poll was cancelled on the grounds of foreign interference, has weighed on investor confidence and increased government funding costs (Figure 1).

Figure 1: Funding conditions for Romania have tightened amid high political uncertainty
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