Brussels expects reforms in Bucharest
Romania’s new Cabinet must address a record wide budget deficit
Bogdan Matei, 23.06.2025, 14:00
The European Commission has once again found that Romania has not taken the necessary measures to reduce its roughly 9% budget deficit, the largest of all EU member states. The cause of the deficit is the steep increase in public spending, mainly due to a rise in public sector salaries and pensions in 2024, and to record-large volume of public investments.
An EC report warns that, at the current pace, Romania risks not meeting its final target of a less than 3% deficit in the next five years, an obligation that must be met by all EU member states.
Under these circumstances, the EU Economic and Financial Affairs Council, EcoFin, which brings together the relevant ministers of the 27 member countries, has asked Romania to present a set of measures to address the deficit by its next meeting, due on July 8. And if it fails to take effective measures to bring the deficit down by October 15, the country risks having its EU funding suspended as of mid-2026.
However, according to Radio Romania’s correspondent in Brussels, beyond this official procedure, all the Commission’s statements indicate that EU institutions are supportive of Bucharest, which has had a difficult period from a political point of view.
The political trouble at home was in fact visible at the EcoFin meeting, where the government was represented by the finance ministry’s state secretary Alin Andrieş and not by his boss, minister Tánczos Barna, who was no longer willing to take part as his party, the Democratic Union of Ethnic Hungarians in Romania, will no longer be in charge of the country’s finances in the new government, of which it will be part along with the Social Democrats, the Liberals and Save Romania Union.
The presidential advisor for the business environment, Dragoş Anastasiu, very likely a future deputy PM, says that the final set of fiscal measures put together by political party experts, must be convincing enough for international rating agencies to keep Romania in the investment grade category.
Mr. Anastasiu also said that the expert groups discussed extensively about progressive VAT rates, and about cutting expenses, prioritising investments and other taxation and adjustment measures. In his opinion, no measures will be implemented before August 1.
As for prospective personnel downsizing in public sector institutions, the presidential advisor believes these things require time, as employment contracts must be complied with. He mentioned that other measures discussed in recent weeks concern dividends, profit taxes and private property taxation, but they will only be rolled out as of next year. (AMP)
