The budget planning for 2026 will begin in November, Romanian finance minister Alexandru Nazare said in a press conference on October 1, adding that the plan for next year should be drafted in such a way that no budget revisions would be necessary.
“Starting in November, discussions will begin for the construction of a new state budget, which will include both essential expenditures and investments, so that such large adjustments will not be necessary next year,” Nazare said, as quoted by Ziarul Financiar.
The government will attempt to meet the 6.4%-of-GDP 2026 deficit target, which would account for a fiscal consolidation of 2% of GDP compared to this year.
Higher VAT and excise taxes on the one hand and constant pensions and wages in the budgetary sector on the other hand are the main drivers that should contribute in roughly equal proportions to the consolidation next year. However, the social pressures put on the families with pensioners and public sector employees would be quite significant considering the 9%-10% headline inflation at the end of this year and the fact that the wages and pensions have already been frozen for one year since the end of 2024.
Speaking of the 2025 budget revision, envisaging a 8.4%-of-GDP deficit compared to 7% initially promised by the past government, minister Nazare explained that the initial draft envisaged RON 10 billion supplementary VAT revenues as a result of improved collection rate, a target missed. Eventually, the deficit was increased by nearly RON 25 billion (EUR 5 billion) to accommodate, among others, some expenditures not included in the initial budget plan.
Minister Nazare also disclosed that during the negotiations with the European Commission on this year’s budget, an 8% of GDP target was discussed as well, but this would have implied supplementary measures on the revenues side (tax hikes).
iulian@romania-insider.com
(Photo source: Gov.ro)
Leave a Reply