Moody’s warned in an ad hoc commentary that the Romanian parliament’s failure to form a government on September 30, for the third time since May, is putting Romania’s fiscal consolidation at risk, while the latest political impasse makes early elections a significant possibility despite President Nicușor Dan’s opposition to such a scenario.

The rating agency also believes it is becoming increasingly unlikely that sufficient political support can be secured to adopt the 2027 budget before the end of this year.

On September 30, Romania’s political deadlock deepened as parliament failed to approve a new government. This was the third PM-designate, but only the second nomination vote, since May, when the pro-European coalition government was dismissed. Despite a new round of cabinet talks scheduled to begin on October 5 and the president’s strong preference to avoid early elections, the latest impasse indicates that the likelihood of snap polls is significant, Moody’s said.

The latest failure to form a government has led Moody’s to question the sustainability of Romania’s fiscal consolidation beyond 2026. While the fiscal adjustment has significantly exceeded expectations so far this year, further measures are needed to continue reducing Romania’s deficit, which remains the largest among EU member states.

Data for the first eight months of 2026 showed the cash deficit narrowing to 2.9% of GDP from 4.5% in the same period of 2025. However, Moody’s notes that much of the improvement reflected temporary restrictions on public-sector wages and social transfers, which reduced total spending by 0.7 percentage points year-on-year, alongside stronger-than-expected tax revenues, with VAT receipts up 25.2%.

Underlying spending pressures remain significant. RRF financing has ended, while pressure to increase spending on defence, public-sector wages and pensions continues to build.

Moody’s said political developments in the coming weeks will be important in determining whether the fiscal adjustment achieved this year will prove sufficiently durable to support Romania’s sovereign credit profile.

Rising interest costs are narrowing Romania’s fiscal space.  Interest expenses reached RON42bn (around €8bn), or 2.2% of GDP, in 2025 and increased by 26.7% year-on-year through August 2026, continuing a multi-year trend of rising debt-service costs.

Political uncertainty has made domestic financing conditions less favourable. The average bid-to-cover ratio at September Treasury auctions was 1.3x, falling to 0.9x for short-term maturities of up to one year. Exchange-rate movements add further pressure to debt-servicing costs and the current-account deficit, while more than half of general government debt is denominated in foreign currencies. Romania’s gross financing needs of around €55bn this year leave the sovereign dependent on continued market access at a time of elevated political uncertainty.