What matters more now for Romania: the credibility of the government to resist and apply the austerity measures – freezing salaries and pensions – and reduce the budget deficit to 7% of GDP, or the appearance in Cotroceni of a sovereignist/populist president with political ideas us? What was discussed in Vienna by those who lend Romania billions of euros

If last year at this time, in the second week of January, at the Forum of Central and Eastern Europe in Vienna, dedicated to the largest investors in the region, i.e. those who lend to states and companies, Romania was seen and even admired for its economic growth and for political stability – the pro-European, pro-Brussels, pro-NATO, pro-American line compared to other countries, now the situation has changed. At the 2025 Forum, everyone, that is, those who analyze Romania and especially those who decide whether or not to lend to Romania and at what interest rates, asked what was happening in Romania after the appearance of Călin in the breaking news, out of nowhere Georgescu and the coming to the fore of the sovereignist, populist, nationalist wave under conditions in which Romania was seen as a politically and economically stable country, with a low probability of slippages on the political level. The PSD-PNL coalition was seen by foreign markets as the ideal solution for Romania both in Cotroceni and in the Victoria Palace, and there were not too many who would have seen a split in this alliance. After the shock at the end of November – the result of the first round of the presidential elections, the fragile parliamentary result for PSD and PNL together and the cancellation of the presidential elections – the world of finance, which in the end does not really have an ideology, began to include the changes in Romania in the price and the economic implications, the result being the demand for higher interest rates to borrow from Romania and the questioning of the credibility and political support of those in power. This is how the risk to Romania has increased, and the interest rates at which Romania borrows have risen by at least one percentage point compared to a stable situation. At first glance, the interest rate increase does not seem high, but in reality, from 6.5% to 7.5% and now to 8%, it means almost 1 billion euros more that must be paid. Moreover, Romania's country rating, which was not good even before, is being called into question, and the Fitch agency changed the outlook from stable to negative, the next step being Romania's relegation to the «junk» category, i.e. a country not recommended for investments. On Friday, January 24, the S&P rating agency must also issue a report on Romania. In the usual/historical way, the Ministry of Finance went to foreign markets to get money for the government in the first week after the conference in Vienna, but this year, because Romania does not have the budget approved or even presented in broad terms – it has to to be presented on January 27, postponed the exit to foreign markets. The government must borrow 231 billion lei this year, in lei and foreign currency, of which 97 billion lei represent loans that are maturing and must be refinanced at much higher interest rates than a few years ago. Out of the total of 231 billion lei, 85 billion lei, equivalent in currency to 17 billion euros, should come from external loans and financing, and 145 billion lei from the domestic market. The external markets – banks, investment funds, sovereign wealth funds, large investors – are full of money, but it's all a matter of risk, perception, analysis and, ultimately, the interest required. Romania is worse than last year in all chapters – political stability, economic growth (economic growth has decreased substantially) and last but not least the credibility, first of all of the Government, of the Prime Minister, of the ministers, credibility assessed in real time by the statements on that make them and how to implement what they say they want to do. Romania has become an extremely important country for portfolio investors, i.e. those who buy Romanian government bonds and securities, due to the increase in public debt, almost three times in the last five years, and the monthly, quarterly, annual financing needs. Romania has become the largest issuer of sovereign debt in Euros in the Central and Eastern Europe region, surpassing even Poland, a country with a double GDP. All these things make Romania much more exposed and watched on international screens, and any statement by a Romanian official is taken seriously. Ştefan Nanu, the head of the Treasury and the Romanian official who talks to the foreign investors who lend Romania billions and billions of euros, emphasized in Vienna the need for credibility that the government must have in applying the approved austerity measures – freezing salaries and of pensions and reducing the budget deficit from 8.6% of GDP last year to 7% this year. If the Government, after all, if Romania wants not to be thrown into the «junk» category by the rating agencies, if we want the interest rates demanded by the financial markets from investors and banks not to skyrocket (in any case, the current level of interest rates is totally unsustainable), the Ciolacu 2 government must stick to the line of austerity, which it sold to the domestic and foreign markets. And so the analysts question whether the approved austerity measures will be sufficient to reduce the budget deficit from 8.6% to 7%, and whether other fiscal measures must be taken, first of all the increase in taxes, because no one believes in the reduction in spending promised by the government. If Prime Minister Ciolacu has much less credibility than last year, when he promised through the Budget Law that he would keep the budget deficit under control, but blew it up in the fall by increasing budget expenditures, now everyone is looking at the new Minister of Finance, Tanczos Barna, who is also a new character, to obtain a cloud of credibility for the government and for Romania. External analysts take for granted, until proven otherwise, what the government, the prime minister, and in this case the finance minister say. If the day before yesterday you say that taxes and fees will not increase, if yesterday you say that this possibility exists after an analysis, if you announce that pensions will increase from September, if you leave a trace of doubt that the Austerity Ordinance cannot be implemented because people are on the streets, it is difficult for the financial markets to give you a passing qualification at the level of credibility. More than ever, at least the new Minister of Finance, because Prime Minister Ciolacu is worse in this chapter, being the same, must be credible in what he says and what he does, otherwise everything is paid for, and Romania/Government they need a lot of money this year and they need investors to be present in the market, not to stand aside, as happened immediately after the results of the presidential elections, when the Ministry of Finance borrowed more difficult, more expensive, and sometimes only through bilateral transactions made with Romanian banks. With a large budget deficit, with an exponentially growing public debt, with borderline political stability and a rising sovereignist wave, things can change overnight regarding Romania. And we are no longer an economy of 40 billion euros, but one that is heading towards 400 billion euros as GDP, and we no longer have a public debt of 40 billion lei, but one that has passed 900 billion of lei and which will reach 1,000 billion lei next year, i.e. 200 billion euros. The slippage – budgetary and credibility – of recent years, contrasts with Romania's economic evolution supported mostly by the private sector. In Vienna, from an economic point of view, Romania was given as an example, this time positively, by the IMF, EBRD and EIB – the European Investment Bank, which are also the biggest investors in Romania. Geoff Gottlieb, head of the IMF for the Central and Eastern Europe region, who just this week begins his visit to Romania, said in Vienna last week that Romania resembles South Korea 15 years ago in terms of economic development, and Poland resembles Korea from the South 10 years ago. Poland and Romania are the largest countries in the region that are followed and sought by all investors. While in Bucharest the people are on the streets, dissatisfied with everything, from the political, social and economic evolution of the country, in Vienna Romania is given as a positive example regarding the evolution and economic growth, totally unexpected. Charlotte Ruhe, EBRD managing director for Central and South-Eastern Europe, said in a panel that companies from Poland and Romania have become extremely sophisticated and can compete globally. Because it has a greater economic diversity, Romania is less dependent on the automotive industry, the EBRD director mentioned, compared to Hungary or Slovakia, which makes it less exposed to current problems. For the IMF, EBRD, EIB, the general risks of the region, i.e. of the countries of Central and Eastern Europe, relate to the high energy prices, the sustained increase in wages in real terms, which causes companies to lose competitiveness, the decrease in employee training – the number of graduates decreased by 20%, the dependence on the automotive sector and last but not least the demographics. The topic of the rise of the sovereignist wave at the political level was less addressed, after all all the countries in the region, led by Austria, but also the countries of the West – France, Germany, even the USA – face this situation, so somehow it is not something new and already included in how each country's risk is perceived. At least at this moment, for the investors who lend Romania, and I repeat, with billions and billions of euros, more important is the credibility of the government, the prime minister, the new finance minister in applying the austerity program and reducing the budget deficit from 8, 6% to 7%, agreed with the European Commission, than which sovereignist can come to Cotroceni and what ideas he has. Let's see what will happen from now on, after the presidential elections.
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