A looming budget battle puts Romania’s creditworthiness on the line Independent Luca Niculescu was confirmed as Romania's prime minister by parliament on Tuesday, ending nearly six months of political deadlock that put pressure on its investment-grade rating and dented investor confidence. Niculescu, 55, won a parliamentary vote of confidence after putting together a minority government of leftists and technocrats following his nomination by centrist President Nicusor Dan. It was Dan's fourth attempt to install a government in the NATO and European Union member state since a pro-European broad coalition cabinet collapsed in early May. Niculescu, who has served as a diplomat and deputy foreign minister and was formerly a journalist, secured 280 votes in parliament, easily passing the 233 required. But he has a daunting task in trying to tackle Romania's economic problems, and political analysts said his government could be short-lived. He must try to make further cuts to one of the EU's largest budget deficits while propping up a contracting economy, eliminating an additional turnover tax on companies and raising pensions that fiscal constraints kept frozen for two years. "I am not asking for a blank check," Niculescu told lawmakers before the vote. "I am asking you to understand Romania needs a government with full powers after so many months of crisis." Budget battle ahead If Niculescu's government cannot get a deficit-reducing budget plan for 2027 through parliament in December, it will risk a ratings downgrade after it already sits on the last rung of investment grade, all the major ratings agencies have said. Romania has agreed with Brussels to bring its budget deficit below 3% of economic output — from over 9% in 2024 and an expected 6.2% this year — by 2030. On Monday, Moody's said the green light for Niculescu's cabinet would allow for the timely adoption of a 2027 budget that supports fiscal correction. The leftist Social Democrats (PSD), which joined Niculescu's government after toppling their former four-party coalition in early May, said they would re-assess their support in six months. Niculescu has also signed political pacts with two centre-right parties from the former coalition in which they agree not to file any no-confidence votes before March 2027. The Eurasia Group think tank said a new government "would restore short-term stability and unblock policymaking." "Ultimately, Niculescu's ability to balance competing demands and maintain parliamentary support will determine whether the government can sustain stability beyond April 2027," it said. Romania's next parliamentary election is due by late 2028. The country has never held an early election. The opposition hard-right Alliance for Uniting Romanians, which has been critical of Brussels, defence procurement and aid for Ukraine, leads opinion polls with about 40% support.
