Why Bulgaria has a better rating than Romania, after eight rounds of elections. A professor of world economics explains the whole mechanism
PSD President Sorin Grindeanu on Sunday invoked the example of Bulgaria to argue that political stability does not automatically guarantee prosperity. The neighboring country, which has gone through eight rounds of early elections in the past five years, still has a better country rating than Romania. How to explain this paradox and what, concretely, a poor rating costs us, explains Christian Năsulea, professor of world economy.
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On February 13, the Fitch Ratings agency maintained Romania's sovereign rating at “BBB minus”, with a negative outlook, one of the most fragile positions in the investment category. At the opposite pole, Bulgaria is at “BBB+”, with a stable outlook, despite a decade marked by repeated political crises and short-lived coalition governments. The two-step difference between the two countries came to public attention after PSD leader Sorin Grindeanu invoked it in a speech about the relationship between political stability and economic prosperity.
“Stability just for the sake of stability, without prosperity, doesn't make sense. I saw in Bulgaria, for example, in the last 3-4 years, there were eight or nine rounds of early elections. The country's rating is better than Romania's today, and you can't tell me that eight or nine rounds of elections meant political stability. Political stability is only good when it brings prosperity.”said Grindeanu.
The monetary board, the euro and externally imposed discipline
Christian Năsulea, professor of world economy, points out, before any comparison, that the difference between the two countries is not as dramatic as it seems and that Bulgaria's rating should not be seen as a model of success.
“First of all, it's not a big difference. So here we're talking about some economies in the euro area with good performance from an economic perspective, but we're talking about a rating that's not of the economy, it's a rating of the state. Both the Romanian state and the Bulgarian state have done an average job, not to say bad, when it comes to the way the state's finances are managed. This is the main reason why we're at BBB, instead of being somewhere else. It's not a good rating that they have Bulgaria. It is a very good rating under the given conditions, under the conditions in which the neighboring country operates“says Năsulea.
Bulgaria's main structural advantage over Romania is not related to elections or coalitions, but to the monetary architecture that the neighboring country has built in recent decades. Bulgaria operated for nearly three decades under a currency board regime, a mechanism whereby the Bulgarian leva was rigidly pegged to the euro and the central bank could not print money at its discretion. This system imposed a structural fiscal discipline that Romania, with its own central bank and independent monetary policy, did not experience to the same extent. Bulgaria's adoption of the euro in 2025 further strengthened this anchoring.
“The main difference when it comes to Bulgaria and Romania at the moment has to do with Bulgaria's membership of the Eurozone, the fact that Bulgaria, through the currency board they used to manage the currency, was obliged to be much more rigorous in the way they managed their finances, which means that the possibility of some slippage affecting the money of creditors was better in Bulgaria than in Romania. The way our Bulgarian neighbors managed their currency in the last decades and now, especially after the transition to the euro, it represents an upward guarantee for the creditors of the Bulgarian state that it will be able to give back the money and that the value of the money it gives back will be very close to the value of the money with which the state was lent”. explained Năsulea.
Bulgaria's public debt, half of Romania's
A second major structural factor is the level of public debt. Bulgaria ends each year with a significantly lower debt to GDP ratio than Romania's. Fitch confirms this outlook in the February assessment, noting that Romania's government deficits remain “among the highest in the category of countries with a BBB rating”. Bulgaria closed 2025 with a deficit of approximately 3% of GDP, exactly at the limit imposed by the EU's Stability and Growth Pact, while Romania recorded a deficit of over 7% of GDP, one of the largest in the European Union.
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“Bulgaria's public debt is somewhere around half of Romania's public debt in relation to GDP. Naturally, this is also meant to give more confidence to external partners, the state's creditors, when it comes to the state's ability to return the money more easily or more difficult. Beyond the indicators that are calculated according to a methodology that is quite strict, it is quite inflexible, there is the suspicion, not to say that there is a certainty in life, that Bulgaria had to resorts to certain artifices, especially after COVID, in such a way as to keep within these very strict parameters, which had to be met in such a way that the transition to the euro could actually take place. Of course, we cannot suspect that 3% would have actually been 9%, in order to get closer to an area where the data from us are comparable to the data from the Bulgarians”Christian Năsulea explained.
Political instability penalized Bulgaria
On the other hand, points out Christian Năsulea, rating agencies have penalized Bulgaria due to political instability, but the structural mechanisms listed above have offset part of this penalty. In other words, without the repeated political crises, Bulgaria could have aspired to a considerably better qualification.
“They didn't close their eyes, because if Bulgaria hadn't had these political crises in a continuous form, Bulgaria's rating could have been significantly better than this BBB where it is. This is definitely the reason why they are so low. Where we had problems related to excesses, budget deficits, fiscal-budgetary irresponsibility, in Bulgaria we are talking about political crises that made Bulgaria end up in the situation of having a rating that is still weak”. says the economist.
Basically, Bulgaria reached BBB+ despite the political instability, not because of it. Romania reached BBB- because of fiscal excesses, not because of the elections.
What exactly does a poor rating cost us?
Beyond the symbolism of the rankings, the country rating has very concrete effects on the costs at which the state borrows on the financial markets and, by extension, on the amounts available for investment, wages and pensions.
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“The better the rating of a state, the better the conditions in which that state can borrow. So, in practice, the poor country rating and the poor outlook that we have in Romania are one of the most important factors that lead us to these very high interest rates when it comes to the loans that we take out.” explained Năsulea.
Romania currently pays some of the highest interest rates on government bonds in the European Union. Each rating step lost means, for a state with a rapidly growing public debt, hundreds of millions of euros more in annual interest, money that no longer ends up in hospitals, schools or highways.
Fitch warns that the negative outlook for Romania's rating reflects “the continued deterioration of public finances, as a result of high fiscal deficits, combined with the rapid growth of government debt“, and that the tensions in the Government, the difficulties in implementing reforms and the absence of a budget adopted on time “represent important risks to fiscal consolidation.“
