The collapse of Romania's governing coalition could complicate talks on the 2027 budget, Karen Vartapetov, Lead Analyst for CEE & CIS Sovereign Ratings at S&P Global Ratings, warned on Wednesday, Reuters reports.
"This is important as Romania's commitment to cut fiscal deficits implies additional consolidation measures in the coming years," he said.
According to the rating agency, S&P Global's warnings regarding potential downgrades for Romania and Hungary reflect the fiscal risks facing the two emerging European economies. Fiscal vulnerabilities have long been the key risk for sovereign ratings in Central and Eastern Europe, Vartapetov noted.
He added that the stagflationary impact of the global energy price shock together with energy-related support measures will likely add pressure to fiscal positions, already stretched by high defense spending and generous social transfers.
"Our negative outlooks on Hungary and Romania and the recent downgrade of Slovakia's credit ratings clearly reflect these risks," Vartapetov said.
In April, S&P Global Ratings affirmed Romania's long- and short-term sovereign ratings at BBB-/A-3, with a negative outlook, leaving the country one step above non-investment grade.
On Tuesday, the Romanian Parliament adopted the no-confidence motion filed by PSD, AUR and PACE - Romania First against the government led by Liberal Ilie Bolojan. The motion passed with 281 votes in favour, four against and three annulled.
