Fitch maintains Romania's investment-grade rating but budget strains remain
A re-run presidential election earlier this year brought centrist Nicusor Dan into power in May after the country's worst political crisis in decades. The new broad coalition government has recently pushed through a series of tax increases and spending measures, aiming to cut the European Union's largest budget deficit.
"Nevertheless, the socio-economic cost of the fiscal adjustment, tensions within the government coalition and strong support for far-right populist parties remain significant political challenges," Fitch said.
The two-month-old cabinet of Prime Minister Ilie Bolojan is already grappling with a stalemate over planned cuts to state spending and public administration jobs. Its largest party, the leftist Social Democrats, have walked out of coalition meetings.
The leftists, without which a ruling majority cannot be sustained, oppose cuts to EU-funded investment projects and to a controversial state budget investment scheme for local administrations.
Fitch said it estimates Romania's budget deficit will remain among the highest in the "BBB" category, even while easing from last year's 9.3% of output to a forecast 7.4% this year and 6.3% in 2026.
"Fiscal consolidation will only mitigate the upward pressure on debt given the very high starting deficit," it added.
The central bank, prime minister and finance minister all warned earlier this week that recession risks have increased. Fitch sees growth at 0.7% this year.
Like Fitch, Standard & Poor's and Moody's rate central Europe's second-largest economy on the last rung of investment grade with a "negative" outlook.
S&P affirmed Romania's sovereign credit rating in an unscheduled ratings review in July but warned that the pending spending cuts will test the cabinet's stability. Moody's will review Romania in September.
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Daily Mail
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The handshake that shook the world: Why Putin left grinning and Trump insisted he'd stood firm after three-hour meeting to change history
In the end, the 'Don and Vlad' show ended without a big finale. After nearly three hours behind closed doors in Alaska, Donald Trump and Vladimir Putin emerged like heavyweight prize fighters who had fought each other to a standstill. They proceeded to talk briefly to the millions watching with bated breath on TV but revealed no specifics of what they had discussed. The only conclusion for those in Kyiv, and in European capitals, was that the encounter had ended in stalemate, and there would be no immediate ceasefire in the Ukraine war. Putin spoke first, and seemed the happier, jauntily inviting Trump to Moscow for another meeting. He and Trump had reached an 'understanding,' Putin said, as he ominously warned Europe not to 'torpedo the nascent progress.' Trump called the summit 'very productive' but said there were a 'couple of quite big' issues not agreed. He later seemed more optimistic and rated it '10/10.' For Trump, it was undoubtedly a historic achievement to get Putin to the negotiating table at all, and a starting point for what may be a long road to peace, and a Nobel Prize. But for Kremlin watchers it looked like Putin had achieved his two main goals - a return to the world stage, and buying more time to make military gains in Ukraine. By agreeing to the meeting Putin avoided further impending U.S. sanctions, and by then not agreeing to a ceasefire he kicked the diplomatic can down the road. Putin's troops are currently advancing in Ukraine, so it was always going to be to his advantage to delay Trump's demands for a ceasefire, and seek a better deal later. Indeed, on the eve of the summit Putin bombed Ukraine yet again with a ballistic missile, and his troops advanced six miles towards the eastern town of Dobropillia. The starting points for the summit had never been entirely promising. 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