Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the cases of sovereigns, sub-sovereigns and supranational organisations that may act as a lender of last resort.

Scope performs monitoring reviews to determine whether material changes and/or changes in macro-economic or financial-market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit rating’s performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope announces the result of each monitoring review on its website and/or on its subscription platform ScopeOne.

Scope completed the monitoring review for Romania (long-term local- and foreign-currency issuer and senior unsecured debt ratings of BBB- and Stable Outlook; short-term local- and foreign-currency issuer ratings of S-2 and Stable Outlook) on 4 July 2025.

This monitoring note does not constitute a credit-rating action, nor does it indicate the likelihood that Scope will conduct a credit-rating action in the short term. Information about the latest credit-rating action connected with this monitoring note along with the associated ratings history can be found on scoperatings.com.

Key rating factors

For the updated rating report accompanying this review, please see here.

Romania’s BBB- long-term credit ratings are supported by: i) EU membership and significant structural and recovery fund inflows in coming years; ii) strong medium-term growth potential which Scope estimates at around 3.5% annually; and iii) a still moderate general government debt stock, amounting to a 54.9% of GDP at the end of 2024.

Conversely, credit challenges associate with: i) high fiscal deficits, forecast to average around 5.9% of GDP over 2025-29, a rigid budget structure, a growing debt-servicing burden and comparatively weak tax base, which constrain the pace of fiscal consolidation and result in a rising debt trajectory; ii) delays in reform momentum and EU fund absorption; and iii) elevated current-account deficits, resulting from fiscal imbalances and competitiveness pressures relative to regional trading partners.

Following a sharp slowdown to 0.8% in 2024, Romania’s economy is expected to recover only gradually, with real GDP growth forecast at 1.3% in 2025 and 2.0% in 2026. Gradually easing financial conditions and improving real household income dynamics, alongside a reduced drag from net exports, should support the recovery, albeit only partially offsetting headwinds from fiscal consolidation and an unfavourable external environment. While Romania continues to benefit from substantial EU fund allocations, persistent delays in disbursements under the Recovery and Resilience Facility pose downside risks to the medium-term growth outlook.

The fiscal deficit widened significantly to 9.3% of GDP in 2024, up 2.7 percentage points year-on-year, driven largely by sizeable revisions to public sector wages and pensions in an election year. Political instability deteriorated in late 2024, following the cancellation of the presidential ballot amid concerns of foreign interference, which extended the electoral cycle, delayed the fiscal consolidation process and caused significant pressure on government funding costs. These fiscal slippages, coupled with weak reform momentum, led the European Commission to conclude in June 2025 that Romania had failed to take effective action in response to the excessive deficit procedure (EDP) launched in July 2024.

In response, Romanian authorities rolled-out an ambitious consolidation programme in July 2025, encompassing hikes in value-added tax rates and excise duties, alongside an extension of a freeze on public sector wages and pensions. The full implementation of this plan, alongside that of a separate fiscal package adopted in December 2024, should support a decline in the fiscal deficit over this year and the next. Scope forecasts that the general government deficit will narrow to 7.7% of GDP in 2025 and 6.2% of GDP in 2026 - all the while remaining the highest in the EU. Over the same period, Scope forecasts the debt-to-GDP ratio to increase to 60.9%, up 6pps from its YE 2024 level. Looking beyond 2026, Scope expects continued fiscal consolidation that should result in a gradually declining fiscal deficit to around 4.7% of GDP by 2030, broadly stable gross-financing needs of around 13-14% of GDP, and a debt-to-GDP ratio of 67% by 2030. Conversely, delays and slippages that result in wider-than-expected fiscal deficits, higher gross-financing needs and/or a steeper public debt trajectory compared to Scope’s baseline would be credit negative.

Scope will thus monitor closely the extent to which the government is able to achieve its own fiscal targets given significant medium-term spending pressures, including from interest and defense, and the persistent political polarisation that may undermine the implementation of planned consolidation measures. In addition, continued delays in EU fund absorption could further constrain growth and exacerbate fiscal risks. Against this backdrop, preserving a constructive policy dialogue with the European Commission, including adherence to the National Recovery and Resilience Plan and fiscal targets under the EDP, remains an essential supportive factor to Romania’s creditworthiness.

The Stable Outlook reflects Scope’s view that risks to the ratings are balanced.

Downside scenarios for the ratings and Outlooks are (individually or collectively):

1. Failure to materially reduce fiscal deficits resulting in a steeper debt-to-GDP trajectory;
    
2. Failure to accelerate pace of EU funds absorption resulted in further delays and/or cuts to disbursements;
    
3. External vulnerabilities increased, such as via a continuation of wide current account deficits, reduction in international reserves and/or intensified funding pressures.

Upside scenarios for the ratings and Outlooks are (individually or collectively):

1. Fiscal consolidation were strengthened, resulting in a stabilisation of Romania’s debt-to-GDP trajectory;
    
2. The government’s capacity for reform were strengthened, resulting in improvements in EU fund absorption;
    
3. External sector risks were curtailed, for example, via a sustained reduction in current account deficits and/or tangible steps taken towards the adoption of the euro.

The methodology applicable for the reviewed ratings and/or rating Outlooks (Sovereign Rating Methodology, 27 January 2025) is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Brian Marly, Senior Analyst

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