In July, Romania’s Prime Minister Bolojan announced a set of austerity measures aimed at closing the budget gap. These include higher-value-added tax (VAT) rates and excise duties, as well as an increase in the number of people contributing to public health.
Romania and the European Commission have agreed that Romania will aim for a budget deficit of about 159 billion lei (roughly $36.8 billion or 31.3 billion euros) this year, which is equal to 8.4% of the country’s gross domestic product. The goal is supported by recently adopted austerity measures, according to Prime Minister Ilie Bolojan.
He explained that the expected effect of these measures will be modest, around 0.6–0.7% of GDP this year, since they were only launched during the last few months and the effects have not yet been fully realised.
By next year, the effect of the measure will be more than 2.5% of GDP, which would happen if Romania sticks to its deficit targets. This would help bring the deficit down to just above 6% of GDP and put public spending on a normal trajectory. For this year, the government plans to keep primary expenditure below 2.8%, Bolojan stated at a press conference.
The 2025 state budget was approved in February. It predicted a 7% deficit of GDP and a 2.5% decline in economic growth.
However, the government is currently working to revise the budget, which is expected to finalise the changes by next Tuesday. The main reason for the revised budget and the higher deficit, which is targeted at 8.4%, is the increase in interest costs. They were initially expected to be over 40 billion lei, but are now expected to exceed 50 billion lei, as highlighted by the prime minister. The government is also preparing a third package of fiscal budgetary measures, which is designed to focus on making local administrations and state institutions more efficient.
In July, Prime Minister Bolojan announced a set of austerity measures aimed at closing the budget gap. These include higher-value-added tax (VAT) rates and excise duties, as well as an increase in the number of people contributing to public health. Many of the measures took effect on August 1. Others, such as an increase in dividend tax from 10% to 16%, will take effect on January 1.
Then, in August, Finance Minister Alexandru Nazare announced a new package of fiscal measures aimed at increasing government revenues. These include new taxes on multinational companies, a tax on parcels shipped outside the European Union, and an increase in the mandatory minimum required social capital for limited liability companies. The government formally assumed responsibility for the second package in parliament on September 1.
The fiscal measures package comes after the European Commission stated in its Spring 2025 Economic Forecast that it projected that there would be a slight decline in Romania’s government deficit to 8.6% of GDP in 2025 and 8.4% in 2026.
In June, the European Commission criticized Romania for not taking sufficient and effective steps to reduce its deficit. It warned that there will be possible sanctions and suspension of EU funds. The EU Economic and Financial Affairs Council (ECOFIN) later adopted a decision confirming that Romania has not taken effective action to address excessive budget deficit.
So far this year, Romania’s consolidated budget has been in decline, reaching 76.44 billion lei for the first seven months of 2025, up from 71.04 billion lei during the same period last year.
According to a statement from the finance minister, Romania’s budget deficit for January-July was 4.04% of GDP, unchanged from last year.
Budget income increased 11.8% in the first seven months, reaching 370.77 billion lei. The amount reimbursed by the European Union was 28.62 billion lei, up 33.6% from the same period in 2024.
