Budget deficit drops

Romania's state budget deficit in 2025 dropped by one percent compared to the previous year

Roxana Vasile, 28.01.2026, 14:00

Since mid-2025, ordinary Romanians have had to deal with tough, highly unpopular austerity measures. The reason was the huge budget deficit, the largest in the European Union, because of which Romania could be downgraded by international financial agencies to ʹjunkʹ, i.e. the category not recommended for investments.

At least so far, this scenario has stayed on paper only. But, on February 13, Fitch is to make public a decision on Romania’s sovereign rating, which is critical to the interest rates at which the government borrows on foreign markets.

In this context, the finance minister Alexandru Nazare said that Bucharest counts not only on maintaining the current rating, but also on improving the country’s performance and rating in the coming period.

In fact, the Romanian authorities presented to Fitch the measures that allowed the budget deficit to be brought below the target undertaken before the European Commission. More precisely, 2025 ended with a cash budget deficit, i.e. a difference between total expenditure and revenue, of about EUR 29 billion, accounting for 7.65% of the Gross Domestic Product.

It is, therefore, a deficit decrease by over 1% compared to the one reported for 2024, and also a decrease compared to the 8.4% undertaken before the European Commission.

Minister Alexandru Nazare argues this is the result of the significant investments financed from non-reimbursable EU funds and of fiscal discipline measures. The increase in budget revenues, including due to tax increases, also contributed to the lower budget deficit.

Thus, revenues from salary and income tax rose by almost 20% compared to 2024, while revenues from profit tax, VAT and social security contributions each increased by more than 10%.

On the other hand, expenditure also went up, including for social assistance and goods and services, as well as personnel expenses. The latter, however, dropped slightly as a percentage of GDP. Interest expenses exceeded EUR 10 billion last year, while those for investments reached EUR 28 billion.

The firm administrative measures taken in the second half of last year and the renegotiation of the National Recovery and Resilience Plan led to this performance, which also enabled the government to earmark record amounts for investments, the finance minister boasted, adding that Romania still pays high interest on the loans it needs in order to cover the expenses that significantly exceeded its revenues in recent years.

Although the situation is improved compared to last year, any government that may come next, Alexandru Nazare emphasised, will have to manage a difficult situation, because of the very high public debt. (AMP)