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.
Romanian Leu's trading dipped below 5.35 against the Euro and 10-year Romanian bond yields remained under 7% following the approval of the Niculescu government, effectively resolving a political stalemate. Societe Generale emphasizes the precarious nature of political stability and the dedication to achieving a deficit below 3% by 2030.
Moody’s warns that upholding the Baa3 rating necessitates the budget's passage before the end of the year. The new Romanian government led by PM Niculescu, post the political deadlock, must sustain political stability, which hinges on the support from the Liberals and ethnic Hungarians. Prime Niculescu's policy plan entails adhering to the Brussels agreement to reduce the deficit to under 3% by 2030.
Moody’s underscores that political stability and a credible budget are crucial to retain Romania's credit rating. To prevent a downgrade to junk status, the passage of the budget before year-end is imperative.
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