Finance minister Alexandru Nazare said on September 16 that Romania will end 2025 with a fiscal deficit that will exceed 8% of GDP, but assured that the new target is currently being negotiated and discussed with the European Commission.
The EC is expected to review Romania’s budgetary conduct under the Excessive Deficit Procedure on October 15.
Romania’s public deficit reached 8.65% of GDP in 2024, under cash terms and 9.3% of GDP under ESA terms. Under the ESA methodology prioritised by the EC, the gap was supposed to drop to 7% of GDP this year and 6.4% of GDP in 2026.
The rating agencies affirming the country’s fragile sovereign rating just a notch above the junk area, with a negative outlook, expressed confidence that Romania can bring its public deficit under 6.4% of GDP in 2026, but abstained from projections for this year.
“This new deficit target [of above 8% of GDP] is being negotiated and discussed in parallel with the European Commission. We will also have discussions at the informal Ecofin that will take place this weekend, and during the next week, there will also be discussions in the coalition. We are talking about a deficit target that will exceed 8%. I do not want to indicate this target exactly at the moment, because it is still under negotiation,” Alexandru Nazare told Digi24, as reported by Ziarul Financiar.
Under these conditions, the budget rectification will be a major revision of the current budget, which, the minister says, was not built on realistic grounds. Through the upcoming rectification, the government wants to cover essential expenses, the needs for European funds, whether it is cohesion funds or the PNRR, so as to maintain the flow of investments and funds.
“And of course, we cover the expenses, those expenses that were partially covered by the current budget,” said Nazare.
The budget presented and approved at the beginning of the year by the Marcel Ciolacu 2 government provided for a deficit of 7% of GDP, respectively RON 134.6 billion, at a GDP of RON 1,912 billion, based on an economic growth of 2.5%.
However, calculations made after the first half of the year reveal that the budget figures do not account for several necessary expenditures.
iulian@romania-insider.com
(Photo source: Facebook/Alexandru Nazare)
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