Market liberalisation
A hot summer for the Romanian economy and society.
Bogdan Matei, 02.07.2025, 14:00
A cap on electricity prices has been eliminated from 1st July, which means that electricity bills will be significantly higher from now on. Almost 4 million households will receive monthly support of 50 lei, the equivalent of 10 euros, in the form of vouchers, to help with the payment of electricity bills. The money will be granted until the end of March next year.
A cap on RCA tariffs, namely the mandatory civil liability insurance policy for motor vehicles in Romania, also came to an end on Tuesday, a measure taken two years ago following the bankruptcy of the insurance company Euroins. The Financial Supervisory Authority says the market has stabilised and that it does not expect any major price increases.
Amid uncertainties with respect to the economic and social prospects, the car market appears to be shrinking. The number of new registrations was down 22% in the first 6 months of the year compared with the same period last year, according to preliminary figures published by the Association of Car Producers and Importers. Electrical cars also saw an even bigger drop last month compared to June last year, amounting to 54%. The purchase of second-hand cars, however, saw a rise of almost 30% in the first 6 months of the year compared with last year. In terms of number of registrations, the local brand Dacia is in the lead, followed by Toyota and Skoda.
This all comes amid efforts from the government to cut the budget deficit, the highest in the European Union’s 27 member states. By the end of the year, Romania is expected to balance its budget by some 30 billion lei, the equivalent of 6 billion euros, for rating agencies not to demote it to junk category, a category not suitable for investment. Ten billion is to be obtained by prioritising investment, 10 more from the adjustment of taxes and another ten from cutting spending. Political sources say the ruling coalition is still discussing the two VAT thresholds to be announced by prime minister Ilie Bolojan and that it is possible for the general level to be increased from 19 to 21%.
What’s for certain is that the cost of living will be higher, and trade unions from all sectors have already begun to stage protests and are threatening with an all-out strike if the government doesn’t go back on its decision to cut the bonuses of public sector employees. The leaders of trade union confederations are requesting an emergency meeting with the prime minister and have called on president Nicuşor Dan to mediate this social conflict. Cartel Alfa announced a large protest outside Parliament, most likely on 15th July, when an extraordinary session of Parliament is expected to adopt the new tax and budget measures.
