Romanian Leu: Stability hinges on budget credibility - Societe Generale

EUR/RON is trading below 5.35, while 10-year RONGB yields remain under 7%, Societe Generale notes, following parliament’s approval of the Niculescu government and the end of the political deadlock. Political stability remains fragile, the bank cautions, while highlighting a commitment to bring the deficit below 3% by 2030. Retaining the Baa3 rating depends on passing the budget before year-end, Moody’s warns.

Fiscal discipline underpins credit rating

"EUR/RON settled below 5.35 and the 10y RONGB yield stayed below 7% as the Romanian parliament approved the new government led by PM Niculescu, ending the political deadlock."

"Political stability remains fragile and conditional on the support of the Liberals and the ethnic Hungarians."

"In his governing program, Niculescu committed to stick to the plan agreed with Brussels to shrink the deficit to below 3% by 2030."

"Moody’s warned that political stability and credible budget are essential to maintain the country credit rating (Baa3). Avoiding a downgrade to junk means passing the budget before year-end."

(An Artificial Intelligence tool assisted in producing this article, which was reviewed by an editor. Find out more.)