Romania is currently spending 7.5% of its public budget, the third-highest ratio in the European Union after Hungary and Italy, because of the high borrowing cost (6% for the 10-year debt, compared to 4.6% paid by non-investment grade Serbia) and despite the lower debt-to-GDP ratio. Streamlining public spending, besides just hiking revenues/taxes, would reduce the borrowing cost and make available significant resources for investments, the business association Concordia argued in a report on the government’s budget revision with a view to the next year’s budget planning.
“When Romania borrows at 4% interest rates, instead of 6%, the difference – billions of euros annually – can be invested in infrastructure, education, and competitiveness. This is the real dividend of fiscal discipline: resources for development, not additional costs generated by a lack of credibility,” the report points out.
Concordia sees some positive signs and urges for more efforts.
The budget execution at the end of August 2025 brings good news regarding accountability, according to the business association’s report. Monthly personnel expenses have remained, since April, around RON 14.5 billion, decreasing slightly. For comparison, 2024 started with RON 11.8 billion to reach RON 14.3 billion in November and RON 16.6 billion in December.
Better management was also observed in spending on goods and services, where the increase compared to the same period last year was only 4%, significantly below the inflation rate.
“These developments demonstrate that fiscal discipline is possible and that there is room for efficiency, without compromising the functionality of the state,” the report concludes.
iulian@romania-insider.com
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