Monday, 25 August 2025
Romania’s financial markets have responded sharply to the political upheaval triggered by Sunday’s vote and the immediate resignation of the leading candidate. Early signs point to deepening economic instability as uncertainty grows over the country’s political direction ahead of the decisive vote on May 18.
The Romanian leu weakened by over 5 units against the euro, reaching an exchange rate of 5.0376 lei per euro. While not catastrophic on its own, the depreciation occurred despite the National Bank of Romania (BNR) intervening heavily in the market, reportedly spending around €3 billion from its reserves to slow the currency’s decline.
Interest rates also rose, with the interbank ROBOR rate climbing, signalling more expensive borrowing costs for individuals and businesses. This is likely to increase mortgage and loan repayments for many households.
Compounding the situation, the government was unable to secure financing on the bond market yesterday as investors demanded interest rates deemed too high. If this pattern continues, Romania could soon struggle to cover essential public spending, including pensions, social assistance, and public sector wages.
There are growing concerns about Romania’s ability to secure funding from the European Union’s Recovery and Resilience Facility (PNRR). Analysts warn that Brussels may be unwilling to negotiate seriously with a caretaker government, jeopardising billions of euros earmarked for infrastructure and development projects.
The possibility of a sovereign credit rating downgrade to “junk” status is increasingly being discussed by financial observers, raising the spectre of broader financial turmoil with social implications.
While these challenges stem from years of fiscal mismanagement and political instability, Sunday’s election result and the resignation have accelerated market anxiety. Attention now turns to the second round of the presidential election on May 18, which analysts argue will effectively decide Romania’s next prime minister and government direction.
A key dividing line has emerged between the two frontrunners. George Simion has announced he would appoint Călin Georgescu as prime minister if elected. Georgescu’s nomination raises questions about Romania’s future economic orientation, with commentators warning of unpredictable policies and possible confrontation with international partners. Markets view his leadership as a source of heightened uncertainty, which could further unsettle investors and institutions.
In contrast, Dan Barna, who has declared he would nominate Ilie Bolojan for prime minister, is associated with a more pragmatic and fiscally disciplined approach. Bolojan’s record in local government, including his tenure as mayor of Oradea and president of Bihor County Council, is seen as focused on reducing wasteful spending, encouraging investment, and improving public sector efficiency.
“This election is not only about choosing a president but also about deciding Romania’s economic path,” said Gabriel Biriș, Partner at Biriș Goran. “Voters face a choice between a controlled restructuring of the state and a riskier, disruptive transition.”
Simion currently leads in projected votes, with estimates suggesting he could secure 5.3 million votes based on likely transfers from first-round supporters. Barna is forecast at around 4 million votes. The 1.3 million vote gap is substantial, but higher turnout in the second round could alter the balance.
Historical patterns show second-round turnout exceeding the first. Analysts estimate that for Barna to overturn the deficit, an additional 2.6 million voters would need to mobilise, bringing total turnout to around 13 million—an ambitious figure given recent participation trends.
“The path forward depends on voter mobilisation,” political commentators note. “Without a significant increase in turnout, a hard landing for Romania’s economy becomes more probable.”
The outcome of the May 18 vote is likely to have immediate consequences for financial markets, government operations, and Romania’s engagement with international partners. Many observers caution that the coming weeks will be critical for the country’s political and economic stability.
