Nicusor Dan stated on Tuesday, at Cotroceni Palace, that Romania's financial situation should be viewed calmly, but meeting the committed deficit-reduction targets is mandatory.

'What is the financial situation, and why is the assessment by rating agencies so crucial? Romania's 2026 budget: 730 billion lei in revenues against 860 billion lei in expenditures. The difference, the deficit, representing the amount we spend without having the funds, thus requiring us to borrow, is 150 billion lei. What does 150 billion lei amount to? It is equivalent to the entire NRRP (National Recovery and Resilience Plan) budget over five years, including both grants and loans, or 2,500 kilometers of motorway built from scratch, or 45 regional hospitals. This is the sum we are spending in 2026 without actually possessing the funds. Of this 150 billion lei, 60 billion lei consists solely of interest payments on the debt we have already accumulated. To put 60 billion lei into perspective: that is 1,000 kilometers of motorway built from scratch, or 18 regional hospitals. I repeat: this is just for interest payments, for the year 2026 alone, on debt already incurred. While we must remain calm in the face of this situation, it is absolutely imperative that we maintain the fiscal trajectory we have committed to the markets,' stated Nicusor Dan during a press conference.

He pointed out that any deviation from this trajectory would mean that 'Romania lacks credibility and risks being unable to pay its debts.'

The head of state then explained the significance of the fiscal-budgetary path from the perspective of rating agencies.

'What does a rating agency do? It tells an investor whether or not it recommends investing in a particular country. We are currently right on the line between a 'recommendation' and a 'non-recommendation.' What would happen if rating agencies were to lower, or 'downgrade', our rating? There are investment funds and pension funds that, under their internal regulations, would be required to withdraw from Romania in such a scenario. This would mean we would have to seek financing from other sources to take their place, sources that would lend to us, but at a higher cost. The question is whether there would be enough of them. And if there aren't, we might eventually reach a point where the IMF has to step in, just as it did in 2009. However, the IMF always imposes stringent conditions for fiscal and financial adjustment. In any case, whether or not the IMF intervenes, and regardless of the presence of investors, the trajectory for correcting the deficit will have to be far more aggressive than it is at present,' noted Nicusor Dan. Without a reduction in spending on salaries and pensions, he pointed out, it is hard to believe that a drastic reduction in the deficit can be achieved.

'The largest expenditure categories in the national budget are personnel costs - salaries and pensions. It is very difficult to imagine achieving a drastic reduction in the deficit without addressing these areas. Furthermore, if the interest rates at which the state borrows increase, the borrowing costs for everyone else in the country rise automatically. For businesses, and it is certainly painful for individuals as well, many are already operating on the edge and cannot withstand any further increase in their borrowing costs. Naturally, as seen in many instances of credit rating downgrades, this has led to business closures and, consequently, unemployment. The exchange rate is also inevitably affected. How does this unfold, and how long does it take to recover? Based on the data, the average recovery period is six to seven years. This is not a fleeting episode, where you get downgraded today and bounce back in three or six months. No. Once you have lost the confidence of the financial markets, it takes years to regain it. For example, Romania lost that confidence in 2008 and only regained it in 2014,' added Nicusor Dan. AGERPRES(RO - writing by: Daniel Florea; EN - writing by: Bogdan Gabaroi)