Moody’s, ahead of the vote on the Government: The New Executive supports fiscal stability

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“In a new commentary published today, Moody’s highlights that the formation of the new government would allow for the approval of the 2027 budget by the end of this year, which would help maintain the credibility of Romania’s fiscal path. The agency believes that political stability and a credible budget are essential given the high financing needs and tighter conditions in financial markets,” states the press release issued by the Ministry of Finance.

The agency maintains its projections regarding the evolution of the budget deficit and anticipates that the fiscal adjustment process will continue. According to the agency’s forecasts, the deficit is expected to decline from 7.9% of GDP in 2025 to 5.8% in 2026 and 5.5% in 2027.

The budget deficit has decreased by 28 billion lei compared to 2025 and has fallen to 2.34% of GDP

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“At the same time, Moody’s estimates a gradual reduction in the primary deficit to 2.7% of GDP in 2026 and 2.3% in 2027,” the statement added.

Moody’s highlights the need to continue reforms to reduce public debt, warning that Romania will face rising interest expenses, personnel costs, and additional funding requirements for defense.

“Moody’s message should be read first and foremost as a call for responsibility and continuity. The 2027 budget will be a major test of credibility: it must be built on realistic revenues, clear priorities, and expenditures that the state can actually sustain. Given that funding needs remain high, fiscal discipline is not an option but a prerequisite for protecting the country’s credit rating,” said Alexandru Nazare, acting Minister of Finance.

The statement was released on Tuesday, a few hours before the government proposed by Luca Niculescu was set to appear before a joint session of Parliament, where deputies and senators will vote on the new administration’s confirmation. The cabinet needs at least 233 votes to win Parliament’s confidence.