Romanian Leu: Budget credibility key to stability - Societe Generale

Societe Generale notes EUR/RON trading below 5.35 and 10-year RONGB yields under 7% after parliament approved the Niculescu government, ending a political deadlock. The bank highlights fragile political stability and a commitment to reduce the deficit below 3% by 2030. Moody’s warns that maintaining the Baa3 rating requires passing the budget before year-end.

Credit rating tied to fiscal discipline

"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."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)