Political instability to weigh on Romania's deficit reduction efforts beyond 2026, Fitch says

Romania narrowly avoided a downgrade from investment grade after its budget deficit shrank more than expected, but Fitch Ratings warned that political instability following a government collapse will weigh on deficit-cutting progress beyond 2026. Fitch affirmed Romania’s sovereign credit ratings at “BBB-/A-3” and kept a negative outlook, citing ongoing financial pressures. The agency said the timing, composition and stability of a new government are “highly uncertain” after a May collapse of a broad pro-European coalition that had governed for 10 months. It warned delayed approval of Recovery and Resilience Facility (RRF) reforms could threaten access to EU recovery funds. Fitch expects 2026 GDP to contract by 0.6%.