Mihai Coca-Constantinescu, who holds an International and European Law LLB from the University of Groningen and an International Trade and Investment Law LLM from the University of Amsterdam, is a PhD candidate in Transboundary Legal Studies at the University of Groningen, based in the Netherlands, where he covers legal developments in Romania as a JURIST correspondent.
On July 31, international credit rating agency Fitch Ratings reaffirmed Romania’s BBB- credit rating, keeping the country at the lowest level considered safe for international investment. The decision spared Romania from a downgrade to “junk” status—a label that signals greater financial risk and can make it more expensive for the government to borrow money. Maintaining its current rating helps preserve investor confidence, avoids the higher borrowing costs that often follow a downgrade, and prevents it from falling into non-investment territory.
Fitch cited Romania’s membership in the European Union and continued access to European funding as important sources of economic stability. In particular, the agency pointed to the EU’s National Recovery and Resilience Plan (PNRR), which provides billions of euros in grants and low-interest loans to support reforms, infrastructure, and economic modernization. These European funds help strengthen Romania’s long-term growth prospects and support its ability to manage public debt. However, Fitch maintained a Negative Outlook because of ongoing domestic challenges, including a projected 2026 budget deficit of 5.9% of GDP, inflation expected to remain near 7.6%, and heightened political uncertainty following the collapse of the four-party governing coalition earlier this year.
Following the announcement, Romanian President Nicușor Dan addressed the nation on Saturday, August 1, 2026. Seeking to calm market anxieties and public fatigue, President Dan urged international investors and Romanian citizens to “distinguish between political action and political noise”. He emphasized that despite widespread political turbulence in Bucharest, the state remains financially stable and continues to honor its core international commitments. The President noted that Parliament passed several critical milestone laws required under the PNRR this week, including the updated Urban Planning Code, and announced that only three statutory milestones remain to be finalized: legislation governing the National Integrity Agency (ANI), the Biodiversity Law, and the complex Public Sector Wage Law. Directing his remarks to the public, Dan acknowledged that purchasing power has dropped due to persistent inflation, insisting that the country’s macroeconomic baseline is successfully stabilizing.
Romania’s fiscal trajectory is tightly linked to European legal and financial mechanisms. Under the EU’s Recovery and Resilience Facility (RRF), billions of euros in grants and low-interest loans are designated for national modernization. However, these disbursements are strictly conditional: the Romanian legislature must meet precise statutory milestones, execute structural tax reforms, and maintain fiscal predictability.
Fulfilling these commitments has been complicated by governance challenges. Following the collapse of the parliamentary coalition in May 2026, President Dan initiated consultations while a caretaker government led by Ilie Bolojan has managed daily affairs. Lacking a stable legislative majority, passing fiscal consolidation measures has proven politically fraught. Moreover, external environmental and economic pressures, such as severe heat and historic low water levels along the Danube River, have disrupted domestic nuclear and hydroelectric power generation, forcing expensive energy imports that continue to fuel domestic inflation.
President Dan’s public address highlights a fundamental legal reality: economic stability is inextricably tied to the predictability and integrity of the legislative process. When political deadlock threatens to stall statutory commitments, the rule of law itself becomes an economic variable.
Under Romania’s Fiscal Responsibility Law (Law No. 69/2010), executive bodies are statutorily required to maintain fiscal discipline, limit structural deficits, and publish medium-term fiscal frameworks to guarantee fiscal sustainability. In practice, however, executive bodies have frequently relied on Emergency Ordinances (Ordonanțe de urgență ale Guvernului) to bypass normal parliamentary debate, relying on temporary fixes rather than lasting statutory reform. While President Dan rightly noted that cross-party consensus exists on broader strategic goals, such as joining the OECD and preparing a roadmap with the National Bank of Romania for eventual euro adoption, the routine reliance on provisional governance erodes constitutional predictability.
President Dan’s call to separate “political noise” from legislative reality is an encouraging attempt to reassure international markets, yet legal scholars and civil society must remain clear-eyed. If legislative gridlock delays the passage of the remaining PNRR milestones, particularly the public sector wage reform and integrity regulations, the European Commission could suspend fund disbursements. The resulting budgetary shortfall would force the state to issue debt at higher borrowing costs, ultimately squeezing public expenditures reserved for judicial administration, legal aid, social infrastructure, and fundamental civil rights guarantees.
To solidify its investment-grade standing and restore long-term stability, Romania’s political leadership must translate President Dan’s assurances into swift legislative action by finalizing PNRR reforms and presenting a credible 2027 state budget. This week, Parliament will debate the National Integrity Agency (ANI) and Biodiversity bills, as well as the government’s progress in drafting the 2027 budget framework ahead of the European Commission’s autumn evaluation. Realistically, with fragmented party dynamics and widespread discussion surrounding potential early parliamentary elections, comprehensive fiscal consolidation will face significant resistance through the autumn months.
Looking ahead, observers should watch closely next week as Parliament debates the National Integrity Agency (ANI) and Biodiversity bills, as well as the government’s progress in drafting the 2027 budget framework ahead of the European Commission’s autumn evaluation.
