The Bucharest Stock Exchange and investments are the government’s trump cards during a crisis

Antonio Kostadinov, Bloomberg TV Bulgaria, May 7, 2026

Summary

Here is a summary of the main points from the conversation between Vladimir Mitev and host Antonio Kostadinov of Bloomberg TV Bulgaria regarding the current political and economic situation in Romania:

Political Crisis and Reshuffling

• The Fall of the Government: Ilie Bolojan’s cabinet fell following a no-confidence vote initiated by the Social Democrats (PSD) in alliance with the far right (AUR).
• Transition Period: The outgoing government is expected to remain in office for about another 40 days. President Nicușor Dan will play a key role, mediating negotiations for a new pro-Western majority.
• New political poles: A reformist center is emerging around Bolojan, while the National Liberal Party is undergoing internal restructuring. The likelihood of the far right (AUR) entering the government is low due to a lack of expertise and the risk of sending a negative signal to international markets.

Economic Situation and Reforms

• Financial Stability: Despite high inflation (10% at the start of the year) and the budget deficit, the Romanian economy remains attractive due to massive public (€31 billion) and foreign (€8.1 billion) investments.
• Staying the Course: Romania is heavily dependent on the Recovery and Resilience Plan, which requires continuing reforms, albeit with less emphasis on the austerity measures that caused social tension.
• Currency and debt risks: The leu is depreciating and interest rates on government debt are rising (above 7%), a direct consequence of political instability.

The Bucharest Stock Exchange as a Regional Leader

• A Successful Model: Unlike the Bulgarian stock exchange, the Bucharest stock exchange is classified as an “emerging market,” which attracts significant capital from New York and London. Its index is near record levels.
• Growth catalysts:
  • The listing of minority stakes in large state-owned companies (e.g., “Hidroelectrica”).
  • Active citizen participation (over 285,000 individual investors).
  • The “Fidelis” program for the purchase of government securities by the public.
• Future developments: Reforms are pending to introduce derivatives, short selling, and the creation of a Central Counterparty to merge the energy and stock exchanges.

Conclusion: Romania is undergoing a difficult process of “adjusting” its political system, but the economic model, based on investment and a developed capital market, remains a stable foundation for the country’s pro-Western orientation.

Interview

Antonio Kostadinov: Now we turn our attention to our northern neighbor, which is once again in a state of political crisis. Earlier this week, the largest party in the ruling coalition—the Social Democrats—joined forces with the far right, represented by the Alliance for the Union of Romanians, to topple the government of Prime Minister Ilie Bolojan. Thus, the path of reforms and strict financial measures to consolidate public finances remains in question. What are the prospects for Romania, whose political system is structured in a way that makes it very difficult to hold early parliamentary elections?

We will discuss this topic with Vladimir Mitev, journalist and founder of the website “The Bridge of Friendship.” Hello, Mr. Mitev!

Vladimir Mitev: Hello!

Let’s start briefly with the timeline we’re seeing. As expected, the Bolojan government fell after the Social Democrats withdrew their confidence, and the no-confidence vote ultimately passed. But what lies ahead for Romania from here on out, given that we’re talking, of course, about a pro-European majority that is, however, highly fragmented?

Yes, there is a period ahead—said to last at least several weeks—during which Bolojan’s government will continue to govern. According to media reports, he can remain in office for another 40 days or so. During this period, the presidency will likely play a greater role, as negotiations between the political forces will take place with the assistance of President Nicușor Dan. He announced that informal negotiations will be held first, followed by formal ones. In other words, he himself is signaling that this will be a lengthy process. Clearly, Romania’s political system is facing a realignment of political forces in a new way, and they need time.

What is becoming increasingly clear is that a trend is emerging around Ilie Bolojan that we might call reformist. There is a possibility that he could lead his own party, which, together with the “Save Romania” Union (another party considered reformist) and perhaps the Hungarian Party, could form some kind of core. But it seems that within the National Liberal Party itself, he currently has sufficient support. That is why there is currently talk that his opponents within the party may be expelled from it. Since we observe that the two first deputy chairmen of the National Liberal Party have declared themselves in favor of the party remaining in the government, i.e., in a coalition with the Social Democrats, while the part of the party close to Bolojan voted to move into opposition. So we are witnessing a reshaping of the political landscape that is gradually taking shape, but is not yet complete.

There will clearly be a reformist faction centered around Ilie Bolojan, with the outgoing prime minister serving as “first among equals” rather than as an absolute leader within it. And it seems—at least that’s how it looks to me for now—that Nicușor Dan has an interest in somehow preserving the pro-Western course and pro-Western orientation of the future government. He himself said that negotiations will take place and concluded, “Rest assured, this government will have a pro-Western orientation.” But clearly the form and the forces that make up the government will change.

Personally, I don’t believe—of course, I may be wrong, since many things are unpredictable in Romanian politics—but I don’t believe the AUR party, which is essentially a political bogeyman (it is the most influential sovereignist party), will make it into the government or at least into positions of influence. First, I think they lack experts. Second, we know that Romania is dependent on international markets, through which it refinances its debt. Interest rates are currently rising again. I suspect that the AUR’s entry into the government would send a bad signal to investors.

Romania relies heavily on investment—we can talk about that in a moment—to emerge from this crisis. And besides, as I said, the debt markets will view AUR’s involvement in politics negatively. So I expect that, if a resolution is reached in the coming weeks, it will be one that preserves the government’s pro-European line in some form, but simply in a different format, in which Bolojan and his faction may remain outside.

You’ve touched on part of my next question. We’re talking here about the state of the Romanian economy. What we observed during Bolojan’s administration, of course, were the necessary austerity measures, financial measures for stabilization, and fiscal consolidation. We see high inflation in the country, a high budget deficit, and high debt. S&P Global Ratings recently left the country’s credit rating unchanged, but with a negative outlook. What does this mean for the country? Since, as you noted, Bolojan’s fall could mean a rejection of these reformist policies, including financial consolidation.

I’m not entirely convinced that the abandonment will be complete. Of course, we’ve said that many things are unpredictable, but it makes sense to continue the reforms, given that Romania is relying on funds from the Recovery and Resilience Plan precisely to secure investments.

In fact, Romania is functioning, and the economy continues to exist and hold steady at a certain, not-bad level, regardless of inflation and the budget deficit, because there is significant public investment—31 billion euros last year. There is also significant foreign investment—€8.1 billion last year. In other words, the Romanian economy is attractive for business development even under these conditions.

The government supports road construction, for example, and highways are being built at a rapid pace, which of course leads to the necessary revitalization of certain regions that had previously been left behind. So Romania has its strengths even at the moment. Some economists say that although it is alarming to see 10% inflation for the first quarter on an annual basis, in fact we are seeing more of a correction. After a long period of economic growth, the economy is now correcting itself—that is one view—and may emerge somewhat stronger once it overcomes this crisis.

So I expect the reforms to be maintained to some extent, but perhaps what have been strict austerity measures so far won’t be quite as strict.

Since discontent is evident and visible in the protests, there is a view that Bolojan has hit economically weaker groups harder through the reforms, while more privileged groups (for example, in the judicial system) have remained, in a sense, almost untouched by these reforms. In other words, there is a sense of injustice. It is precisely this sentiment that the Social Democrats are likely capitalizing on—they were part of the government that voted for these changes, yet now they are distancing themselves from Bolojan, as if he were solely responsible for all of this, while they, of course, were on the side of the people.

But as I said, in my view, Romania must continue with these investment-based policies—growth no longer based primarily on consumption, as it was two years ago, but growth based on investment. And for that, European funds will be needed, both under the Recovery and Resilience Plan and the standard funds from the multiannual financial framework.

Mr. Mitev, let’s look at Romania’s public debt, since it has fairly high interest rates, which of course makes it attractive to investors. But is there a risk of the situation worsening if we consider the possibility of a prolonged political crisis in the country, even though we haven’t actually seen early parliamentary elections in Romania since 1989, unlike in Bulgaria, for example?

We are already seeing a deterioration in interest rates, as they were around 6.4% in February and are now 7.3%, if I’m not mistaken, or certainly above 7%. Furthermore, the leu is depreciating, and there are fears it could even reach 6 lei per euro. Let me remind you that a week ago it was at 5.09 lei per euro, and as of yesterday it is around 5.26 lei per euro. This, of course, worries ordinary people, who over the past year or more have seen no significant or almost no wage increases, since wages in the public sector have been frozen. Their purchasing power is declining, and so on.

So there really are such fears, and that is precisely the challenge—that there are currently two crises. One is that the political system traditionally needs time to adjust when a “setup,” if I may use that term, or a governance formula, breaks down. The other is that the financial markets and the economy are waiting and want to know who signs the decisions, who makes them, and who can be relied upon for stability. And in that regard, we’ll have to see what happens.

I think there is a possibility that Nicușor Dan could back a non-partisan figure to nominate as prime minister, and there is a view that this could be someone with a more technocratic profile. Whether this will happen, and who that person might be, remains to be seen following the negotiations and discussions over the next month.

And despite this macroeconomic picture and financial conditions—especially when we talk about the credit rating and Romanian government debt—what do we see in the local capital market on the Bucharest Stock Exchange? Did we see a reaction after the government was ousted and after the no-confidence vote passed successfully? Did we see a reaction on the Bucharest Stock Exchange, which, despite everything, we must say was one of the fastest-growing and best-performing markets in Central and Eastern Europe over the past year?

Yes, the Bucharest Stock Exchange is booming. There was a brief dip when the decision on the no-confidence vote was reached, but in reality, the stock market index remains very high—close to 29,000 points, which is nearly a record high. It might be interesting for our listeners and viewers to know that the Bucharest Stock Exchange is considered a higher-tier market according to certain criteria. It is classified as an emerging market, unlike the Bulgarian Stock Exchange, which is a frontier market. This means that the Bucharest Stock Exchange attracts funds from New York, London, and Frankfurt to a much greater extent than the Bulgarian one, and this, of course, affects prices, which have been rising sharply for quite some time now. Furthermore, Romania has somehow managed, to a greater extent than Bulgaria, to foster a culture of financial literacy among more citizens, as of March this year there are 285,000 individual investors on the Bucharest Stock Exchange.

Last but not least—something that is also being discussed here as we await the new government—is that state-owned companies could be listed by selling minority stakes on the stock exchange. This has been done in Romania in recent years, as a result of which it has managed to raise its standing to a higher level, as trading volumes have increased. We’re seeing a different kind of stock exchange, I’d say, since we know that on the Bulgarian Stock Exchange the spreads between “sell” and “buy” are relatively wide, whereas on the Bucharest Stock Exchange this isn’t the case. There, it’s easy to enter and exit a position; there’s greater liquidity. And last but not least—there are plans for it to develop further, for example, by offering derivatives. As far as I can tell from media reports, this should be completed very soon. Short selling is also expected to be introduced following the completion of a stock exchange reform related to the establishment and operation of the so-called Central Counterparty—an entity that will link the energy exchange and the stock exchange.

In this regard, it also seems to me that the Bucharest Stock Exchange could be of interest to our audience, to financial circles, and to ordinary citizens. I would just like to note here that if someone is looking to invest on the Bucharest Stock Exchange—since it is logical for us, as a neighboring country, to have an interest—at this point, based on my personal research, this is quite difficult. I would say it is almost impossible for an individual investor, since our major investment brokers simply do not offer such an option. My experience discussing this with some Romanian investment brokers also shows that it is not so easy for a Bulgarian to open an account. But in any case, I think the Bucharest Stock Exchange can serve as inspiration for many initiatives that we, too, are discussing as necessary steps.

I would add to your remarks, of course, that although there are no direct investment intermediaries offering such an option, there are the funds of “Expat Capital”—Mr. Nikolay Vassilev was with us a few weeks ago. They have exposure to the Romanian stock exchange through exchange-traded funds (ETFs). But what you noted was key, in my view, including the role of the privatization of minority stakes. In your view, is this the main catalyst for strengthening the local capital market on the Bucharest Stock Exchange, so that it can surpass the Bulgarian market in terms of both liquidity and market capitalization, given that a few decades ago they started out at roughly the same levels?

Perhaps I should add here that the Romanian stock exchange is largely dominated by energy companies. For example, the largest electricity supplier—Hidroelectrica, which is actually a state-owned company generating electricity from hydroelectric power plants—has (if I’m not mistaken, based on the latest information) about one million customers. This company is massive in terms of market capitalization. Its listing led to the market capitalization growing even further and provided opportunities for many people—ordinary citizens and individual investors. I’m not just talking about this company; generally speaking, the listing of these companies (this is just one example) has allowed people to buy shares, and the dividends they pay out look quite good. The government has a policy, especially in these times of crisis, to collect dividends from state-owned companies, as it needs the funds they generate. So there are dividends, and I think that stimulates trading on the stock market.

Another aspect, another measure that stimulates trading on the stock exchange, was the introduction of the option to purchase government securities—the so-called Fidelis. I see that this is being discussed here as well; there have been legislative changes and proposals along these lines. In Romania, this has existed for some time, and in fact, a large portion of individual investors enter the Bucharest Stock Exchange by first making precisely such purchases of government securities. Perhaps it is a wise policy for government securities to be held by the country’s own population.

Thank you very much, Mr. Mitev, for this conversation. Our guest was Vladimir Mitev, a journalist and founder of the website “The Bridge of Friendship,” discussing the political crisis in Romania and the prospects for our northern neighbor.

Foto: (source: Bucharest Stock Exchange)

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