Romania's political stalemate sparks Moody's rating warning

Parliamentary negotiations to appoint a new Romanian prime minister have stalled, with President Nicușor Dan unable to secure an agreement between the PSD, PNL‑USR and UDMR blocs. Opposition leader Kelemen Hunor has called for a "small coalition" or a renewed PNL‑PSD‑UDMR government, but no consensus has emerged as the parliamentary session nears its end.

On 26 June, rating agency Moody’s sent a notice to investors warning that prolonged political uncertainty and the lack of a functional parliamentary majority could pressure Romania’s fiscal consolidation. The agency noted that a stable political framework and institutional capacity are essential to keep the fiscal plan on track. Finance Minister Alexandru Nazare said, "Miza economică majoră a acestor zile este evitarea retrogradării ratingului de țară." Moody’s expects the deficit to fall from 7.9 % of GDP in 2025 to 6.5 % in 2026 and 5.9 % in 2027, but this trajectory depends on successful reforms.

Moody’s also highlighted a possible rise in interest‑payment costs to 9.2 % of budget revenues in 2026 and 9.6 % in 2027, and warned about vulnerabilities to exchange‑rate fluctuations, with more than half of public debt denominated in foreign currency. The agency’s alert has already coincided with a 30 % drop in foreign direct investment and capital outflows exceeding €0.5 billion in the first half of 2026, raising concerns that a downgrade to “junk” could further increase borrowing costs for Romania.