Romania 2025: Fiscal Cuts Plan and Budget Deficit Strategy
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Romania faces a critical financial crossroads: holding the highest budget deficit in the EU and under pressure from the European Commission. A new coalition led by Ilie Bolojan has announced an extensive package of fiscal cuts and expenditure controls. Stabilize public finances, avoid a country rating downgrade, and secure EU funding access. At Stirinoi.com, we examine the latest decisions, immediate effects, and potential long-term outcomes.
1. Background and Immediate Goals
On June 4, President Nicușor Dan demanded "a credible deficit-reduction plan by June 30".
Romania recorded a 9.3 % GDP deficit in 2024; projected at 8.6 % for 2025 .
To avoid EU funds suspension (ESI, RRF) and a credit rating downgrade, the government must submit an effective plan by the Ecofin meeting in July .
2. Fiscal Package Details
According to government statements post-cabinet meeting, the plan includes:
Spending cuts: merging institutions, reducing bonuses and extra leave days (1–3) .
Tax adjustments: streamlined VAT, higher property and dividend taxes, possibly a one-off bank tax .
Delayed investments: to balance the budget without cutting social spending drastically .
Five-year roadmap: target deficit of 7 % GDP in 2025, below 3 % by 2030, while sustaining public investment .
3. Key Facts
Fact | Details |
5-month deficit | Jan–May: budget deficit at 3.39 % of GDP (64 billion lei) |
EU deadlines | ECOFIN required concrete action by October 15, 2025 |
Public debt growth | Forecast rising from 54.8 % (2024) to ~59.4 % of GDP in 2025 |
AUR proposals | 15 % budget cuts in 2 years, 19 % VAT on e‑commerce, 300-seat parliament |
Eurozone entry delayed | ERM II and euro adoption pushed to 2029–2030 due to high structural deficit |
4. Viewpoints and Reactions
Government (Bolojan / Barna): Emphasis on spending cuts; VAT rise is on the table but limited .
President Dan: Insisted on readiness by June 30 to safeguard EU funds.
ECOFIN / European Commission: Warned of delayed action, potential financial penalties and rating downgrade .
AUR: Criticizes lack of transparency; offers its own austerity plan .
Economist Stolojan: Predicts measures could slow economic growth under 1 % this year .
5. Conclusion
Romania's deficit-reduction package combines spending cuts, mild tax hikes, and postponed investments. The goal is fiscal sustainability and maintaining the pro-European trajectory—prominently featured on Stirinoi.com. The major challenge is balancing austerity with economic growth amid political uncertainty. Success will depend on implementation and tangible budget improvements by EU-set deadlines.
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