Fitch: Romania's political instability to hinder deficit cuts post-2026

Romania's budget deficit narrowed to 2% of economic output in the first six months of the year, down by almost half from the same period last year. Fitch expects the full-year shortfall to be 5.9% of output, while the country targets a deficit of 6.2% under local accounting terms.

The agency warned of significant medium-term risks to further deficit cuts due to implementation challenges, socio-economic costs of additional measures, and political considerations ahead of the 2028 parliamentary elections. Fitch also forecasts Romania's economy to contract by 0.6% overall in 2026.

Romania does not yet have a government following the collapse of a coalition in May, which endangers access to European Union recovery funds and efforts to reduce the bloc's largest budget deficit. Fitch stated that the timing, composition, and stability of a new government are highly uncertain amid deep divisions among former coalition partners.