Rating action

Scope Ratings GmbH (Scope) has today affirmed Romania’s long-term local- and foreign-currency issuer and senior unsecured debt ratings at BBB-. Scope has also affirmed the short-term issuer ratings at S-2 in local and foreign currency. All Outlooks remain Stable.

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, albeit increasing, general government debt stock, amounting to 54.8% of GDP at the end of 2024.

Conversely, credit challenges associate with: i) high fiscal deficits, forecast to average around 5.4% of GDP over 2025-30, a rigid budgetary structure, a growing debt-servicing burden and comparatively weak tax base, which constrain fiscal consolidation efforts and result in an upward public debt trajectory; ii) elevated political polarisation, adding implementation risks to the fiscal consolidation agenda; and iii) elevated current-account deficits, resulting from fiscal imbalances and competitiveness pressures relative to regional trading partners.

For the updated report accompanying this review, click here.

Key rating drivers

EU membership provides a key policy anchor, supporting growth and external resilience via large funding allocations.

Romania’s credit ratings are underpinned by its European Union (EU) membership, which drives significant EU capital inflows to support income convergence with the EU average and ease external financing pressures linked to persistently high current account deficits. Structural reforms tied to the disbursement of EU funds should further support medium-term growth, which Scope estimates at around 3.5%.

Moreover, Scope expects continued absorption of EU resources via the Recovery and Resilience Plan (RRP) as well as allocations under the EU Cohesion Policy programme (amounting to EUR 31bn for the 2021–2027 Multiannual Financial Framework, equivalent to around 8.8% of 2024 GDP) to mitigate the negative impact on growth resulting from the government’s efforts to restore fiscal sustainability in the near-term. Despite delays in the implementation, Romania is slated to receive EUR 7.2bn in grants and EUR 3.5bn in loans under the RRP, for a cumulative amount of EUR 10.7bn (3.1% of 2024 GDP), before the conclusion of the programme. To accelerate implementation, milestones have been simplified, and Scope expects an acceleration in the execution ahead of the August 2026 deadline.

Additional financial support comes from the Security Action for Europe (SAFE) programme, under which Romania should receive loans up to EUR 16.7bn at favourable funding conditions until 2030, the second-largest allocation among EU member states. This will partly mitigate funding pressures arising from increasing defense spending, which is projected to rise to 3.5% of GDP by 2030 from around 2.3% in 2025 (as measured by the NATO definition).

After reaching 2.3% in 2023, economic growth decelerated to 0.9% in 2024, weighed down by negative contributions from net exports and weaker investment activity, despite resilient private consumption. Looking ahead, Scope expects real GDP growth to rebound to 1.3% this year before slowing again to 0.7% in 2026. This modest near-term growth outlook is driven by the fiscal consolidation measures which will likely dampen domestic demand in late 2025 and 2026. Moreover, inflation has picked up again (monthly HICP averaging 7.9% in Q3 2025, up from 5.4% in the previous quarter and 5.3% over the same period last year), driven by the expiry of the electricity price capping scheme and the hikes in VAT rates and excise duties, justifying the National Bank of Romania’s gradual approach to monetary policy loosening. Importantly, public-sector wage growth has been temporarily restrained following recent wage-freeze measures and tighter hiring controls, reducing risks of an inflation–wage feedback loop.

Still, despite these near-term growth pressures, Scope expects growth to gradually converge towards its medium-term potential, underpinned by sizeable EU funds and expectations of continued convergence towards EU productivity levels.

Still-moderate, albeit rising, public debt burden and recent improvements towards fiscal consolidation.

Romania’s credit ratings are further supported by its still-moderate public debt burden and recent signs of political stability facilitating policy continuity to support fiscal consolidation efforts until the next scheduled elections in 2028.

The debt-to-GDP ratio stood at 54.8% at end-2024, well below the EU average of 80.7%, despite having increased steadily in recent years (up 5.5pps from 2023). Spending pressures from pensions and public wages resulted in large fiscal deficits of 7.5% of GDP on average over 2022-24, driving the increase in the public-debt ratio from 48.1% in 2022.

While fiscal consolidation efforts were delayed in 2024-25 following the Constitutional Court’s decision to annul the results of the first round of presidential elections in November 2024, Scope’s view is that the formation of a new four-party coalition government since June 2025 will mitigate the increase in the debt-to-GDP ratio in the coming years. Authorities have presented an ambitious fiscal consolidation plan, including raising standard and reduced VAT rates, taxing more goods at the standard rate, and increasing excise, property, and dividend taxes. While the impact in 2025 should be comparatively modest due to the short implementation period, the adjustment is expected to intensify significantly in 2026. Moreover, Scope expects further consolidation measures going forward to help contain the rise in government debt.

As the debt-to-GDP ratio is projected to continue increasing in coming years, reaching 61% by end-2026 and around 67% by end-2030, political stability and policy continuity to ensure sustained fiscal adjustments over a multi-year period are critical to prevent a sharper deterioration in public finances.

Credit challenges: high fiscal deficit; elevated political polarisation, and vulnerability to external risks.

Romania’s ratings are constrained by persistently high fiscal deficits, a rigid budgetary structure, a growing debt-servicing burden, and a comparatively weak tax base, all of which limit the pace of fiscal consolidation. The fiscal deficit surged to 9.3% of GDP in 2024 - the highest level in the EU and an increase of 2.6pps from the previous year. While Romania has started to implement its fiscal consolidation plan, Scope projects that fiscal deficits will remain among the largest in the EU, narrowing to 8.3% of GDP in 2025 and 6.2% in 2026. Beyond 2026, continued consolidation is expected to gradually reduce the deficit to around 4.6% of GDP by 2030.

Importantly, however, political polarisation and Romania’s weak track record of fiscal discipline add significant downside risks to the successful implementation of this consolidation plan. Although political uncertainty has eased and the new government has introduced an ambitious initial strategy, questions remain over the durability of the four-party coalition formed in June 2025.

The government coalition faces challenges in maintaining unity and political support for fiscal tightening amid growing social discontent. Furthermore, the agreement between the two largest parties, Prime Minister Bolojan’s centre-right PNL and the centre-left PSD, to rotate the premiership in 2027 adds further policy uncertainty. The scale of the adjustment also poses risks to economic growth, which could weaken more than currently anticipated, leading to consolidation fatigue. Correction of fiscal imbalances will hinge on the government presenting and executing a detailed plan for continued deficit reduction beyond 2026.

Finally, Romania’s resilience to external economic shocks remains constrained by structurally high current account deficits and associated reliance on foreign capital. The current account deficit widened to 8.3% of GDP in 2024 from 6.6% in 2023, driven by increased import demand following a surge in government spending, underscoring the economy’s persistent twin deficit challenge. Efforts to rebalance the current account are challenged by the significant appreciation of the real exchange rate in recent years, following an episode of elevated price and wage growth compared to regional peers, which has eroded export competitiveness (ULC-based real effective exchange rate up by 11.6% in 2024). Moreover, the deficit has been financed largely through debt-creating flows (more than two-thirds over 2023-24), making Romania more vulnerable to shifts in investor sentiment.

Looking ahead, the current account deficit is expected to narrow gradually, as fiscal consolidation progresses, though it will likely remain sizeable at a projected 5.8% of GDP annual average over 2026-30. The funding mix will also improve, as an expected acceleration in EU funds disbursements and improvements in FDI inflows reduce reliance on market-based funding flows and bolster foreign exchange reserves.

Rating-change drivers

The Stable Outlook reflects Scope’s view that risks to the ratings are balanced over the next 12 to 18 months.

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

1. Fiscal slippage resulting in a steeper debt-to-GDP trajectory; and/or
    
2. Weaker EU funds absorption resulting in further delays and/or cuts to disbursements; and/or
    
3. External vulnerabilities increased, such as via continued wide current account deficits, a reduction in international reserves and/or intensified funding pressures.

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

1. Fiscal consolidation were strengthened, resulting in a stabilisation of Romania’s debt-to-GDP trajectory; and/or
    
2. The government’s capacity for reform were strengthened, resulting in improvements in EU fund absorption; and/or
    
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.

Sovereign Quantitative Model (SQM) and Qualitative Scorecard (QS)

Scope’s SQM, which assesses core sovereign credit fundamentals, signals a first indicative credit rating of ‘bbb’ for Romania. Under the methodology, the first indicative rating next receives: 1) no positive adjustment from the methodological reserve-currency adjustment; and 2) no negative adjustment from the model’s political-risk quantitative adjustment. On such basis, the final SQM quantitative rating is ‘bbb’ and next reviewed by the Qualitative Scorecard (QS) and can be changed by up to three notches depending on the size of the sovereign’s qualitative credit strengths or weaknesses compared against those of an SQM-assigned peer group of sovereign states.

Scope identified the following QS relative credit strength for Romania: growth potential and outlook. Conversely, the following credit weaknesses have been identified in the QS: i) fiscal policy framework; ii) long-term debt trajectory; iii) resilience to short-term external shocks; iv) social factors; and v) governance factors. On aggregate, the QS generates a net one-notch negative adjustment for Romania’s credit ratings.

These adjustments conclude in final BBB- long-term ratings on Romania. A rating committee has discussed and confirmed these results.

Factoring of environmental, social and governance (ESG)

Scope explicitly factors in ESG issues in its ratings processes via the sovereign-rating methodology’s stand-alone ESG sovereign-risk pillar, which holds a significant 25% weighting under the quantitative model (SQM) and 20% weight under the methodological qualitative overlay (QS).

Environment-related credit risks remain material for Romania. The comparative dependence of the Romanian economy on energy-intensive production presents a challenge for policymakers under tightening financing conditions and needed economic transitions towards the green economy. Romania has estimated investment needs of around EUR 150bn (7% of GDP annually) to achieve its climate objectives through 2030. EU investment funds represent a critical opportunity for Romania to increase the production of renewable energies and facilitate the transition to a lower-carbon economy. Romania is much less dependent on Russian energy sources than its regional peers due to local production and is expected to increase investment in offshore gas production in the Black Sea. Under the qualitative assessment of environmental factors, Romania is assessed as neutral compared with its sovereign peers.

Social factors are characterised by a rapidly increasing old-age dependency ratio, elevated income inequality and low labour force participation rate (66.6% as of 2024). Net emigration remains a key hindrance to the long-term growth outlook, despite the moderation in net emigration flows in recent years, notably relating to the recent inflow of Ukrainian refugees. Under the qualitative assessment of social factors, Romania is assessed as weak compared with its sovereign peers due to Romania’s high poverty rate and high risk of social exclusion.

Regarding governance-related factors, Romania’s performance is weaker than that of central and eastern European EU peers, as assessed under the World Bank’s Worldwide Governance Indicators. Romania has a history of unstable governments, contributing to years of expansionary fiscal policies around electoral periods and a relatively weak absorption of EU funds. Nonetheless, Romania’s EU membership enhances economic governance. External security risks for Romania have increased since the further escalation of the war in Ukraine, a neighbouring country, but Romania’s NATO membership represents a strong security umbrella. Under the qualitative assessment of governance factors, Romania is assessed as weaker compared with its sovereign peers.

Rating Committee
The main points discussed by the rating committee were: i) domestic economic risk; ii) public finance risk; iii) external economic risk; iv) financial stability risk; v) ESG-related risk; and vi) rating peers.

Methodology
The methodology used for these Credit Ratings and/or Outlooks, (Sovereign Rating Methodology, 27 January 2025), is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The model used for these Credit Ratings and Outlooks (Sovereign Quantitative Model (ex CVS Model) version 4.1) is available in Scope Ratings’ list of models, published under scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Credit Ratings were not requested by the Rated Entity or its Related Third Parties. The Credit Rating process was conducted:
With Rated Entity or Related Third Party participation         YES
With access to internal documents                                      YES
With access to management                                               YES
The following substantially material sources of information were used to prepare the Credit Ratings: public domain and the Rated Entity.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and Outlooks and the principal grounds on which the Credit Ratings and Outlooks are based. Following that review, the Credit Ratings and Outlooks were not amended before being issued.

Regulatory disclosures
These Credit Ratings and Outlooks are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and Outlooks are UK-endorsed.
Lead analyst: Brian Marly, Senior Analyst
Person responsible for approval of the Credit Ratings: Alvise Lennkh-Yunus, Managing Director
The Credit Ratings/Outlooks were first released by Scope Ratings in January 2003. The Credit Ratings/Outlooks were last updated on 1 March 2024.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use / exclusion of liability
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