S&P holds Romania rating, expects credible budget framework

Oct 2 (Reuters) - Global credit ratings agency S&P maintained Romania's rating at 'BBB-/A-3' on Friday, citing expectations that the country will successfully form a government that will adopt a credible budgetary framework for 2027-2028.

"Despite the absence of an agreement to form a new government since the May dissolution, Romania’s 2026 fiscal consolidation remains on track," S&P said in its report.

Romania's consolidated budget deficit stood at 2.89% of GDP through August, versus 4.51% a year earlier, and is on track to reach its full-year target of 6.2%, down from over 9% in 2024.

Romania has agreed with Brussels to bring its deficit back below the EU's 3% of output ceiling by 2030.

S&P expects Romania's economy to shrink by 0.5% before returning to 2.25% growth in 2027, supported by recovering consumption and a reduced fiscal impulse.

The affirmation keeps the sovereign on the lowest rung of investment grade, in line with peers Fitch and Moody's.

Romania narrowly avoided a downgrade to "junk" by peer Fitch at the end of July, and all three major ratings agencies have stressed that the country needs to pass a 2027 budget by the end of this year, laying out further reductions to the deficit.

The agency also maintained the country's 'negative' outlook, warning that risks relating to the consolidation of public finances and the narrowing of its external deficits remain elevated.