What risks exist for pensions if Romania were to be downgraded by rating agencies

International rating agencies have announced whether or not they are downgrading Romania, and in this context, financial analysts have discussed the worst-case scenario: one in which the Romanian state would no longer be able to pay pensions and salaries on time. The reason would be a loss of access to financing, which could trigger budgetary blockages.

Specifically, the interest rates at which Romania is currently borrowing stand between 6% and 6.8%. In a downgrade scenario, these rates would rise, and financial markets could become reluctant to lend to the Romanian state. This could lead to delays or difficulties in paying pensions and public sector salaries.

There are over 4.6 million pensioners in Romania, and the state allocates over 13 billion RON per month to cover these payments.

What actually happened

According to information cited in related articles, Romania avoided an economic downgrade: the Fitch agency maintained the country's rating at "BBB-", albeit with a negative outlook. Finance Minister Alexandru Nazare commented on the decision, saying that it "gives us time, not comfort".