Romania’s general government budget deficit halved y/y to RON 6.4 billion (EUR 1.25 billion) in October, when the tax revenues increased by 15.6% y/y – ten times the 1.5% y/y advance of current expenditures, according to data published by the Finance Ministry. Notably, the payroll narrowed by 4.0% y/y and the expenditures with goods and services by 7.6% y/y after both categories posted 6%-7% y/y advancements in January-September.
The public deficit edged down marginally (-0.5% y/y) to RON 108.9 billion (EUR 21.4 billion) in January-October, while the deficit to GDP ratio eased to 5.72% in the first ten months of this year, compared to 6.22% in the same period of 2024.
The government targets an 8.4% of GDP deficit for the entire year 2025, a moderate improvement from 8.65% in 2024.
Some elements of the monthly execution in October confirm positive results driven by the first package of budgetary measures and the general policy of prioritising public expenditures enforced by the government of prime minister Ilie Bolojan. Besides lower payroll and expenditures with goods and services, the interest paid on public debt rose by a moderate 9.4% y/y in October after it had surged by 50% y/y in January-September and by 63% y/y in Q3.
The improvement recorded in October still needs to be confirmed by further readings, with this indicator remaining key for the success of Romania’s budget consolidation programme.
General government revenues increased by 12.3% y/y to RON 532 billion or 27.9% of GDP in January-October, marking an improvement in the revenues-to-GDP ratio from 26.9% in the same period of 2024. The improvement was only partly driven by 32% larger transfers from the EU budget, as the domestic revenues to GDP ratio also increased from 25.2% to 25.8%.
The overall advance in revenues was 12.3% y/y in October, the same as in January-September, but the tax revenues accelerated to +15.6% y/y from +10.7% y/y in January-September. The net VAT collection surged by 21.6% y/y (helped by a higher VAT rate) in October from +7.7% y/y in January-September.
General government expenditures increased by 9.9% y/y to RON 640 billion or 33.7% of GDP in January-October, compared to a smaller (33.1%) expenditures-to-GDP ratio in the same period of 2024. However, the expenditures without those financed from EU grants increased by only 8.7% y/y, and the ratio to GDP for this adjusted expenditures category increased marginally to 31.0% from 30.8% in 2024.
In October 2025, the public expenditures without those financed from EU grants increased nominally by 1.3% y/y, and the ratio to GDP dropped to 3.3% from 3.6% in the same period of 2024.
Public payroll contracted by 4.0% y/y and expenditures with goods and services by 7.4% y/y in October 2025, after they increased by 6.0% and 7.4% respectively in January-September. The volume of subsidies from the state budget remained moderate, -34% y/y in October after -33% y/y in January-September.
The volume of investments from the national budget and EU transfers contracted by 1.1% y/y to RON 15.8 billion after the buoyant +16.1% y/y surge in January-September. For the entire January-October period, total investments, including other expenditures financed from EU budgets, rose by 13.3% y/y to RON 115 billion (EUR 22.5 billion), or just over 6.0% of GDP, compared to 5.75% in the same period of 2024.
The balance of the Romanian general government, normalised to filter out the transfers from the EU budget and the expenditures linked, contracted by 0.9% y/y to RON 98 billion in January-October, or 5.15% of GDP from 5.62% in the same period of 2024.
iulian@romania-insider.com
(Phoro source: Alexandru Marinescu/Dreamstime.com)
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