Prospects for inflation and budget deficit
In Romania, inflation is expected to drop by the end of 2026, to almost 3.5%, provided that measures to reduce the budget deficit are implemented.
Corina Cristea, 18.09.2025, 14:00
Romania will remain in the excessive deficit procedure for a few more years, because it has been very late with the budgetary adjustment process, the Finance Minister Alexandru Nazare said at a specialized event. However, he added, Romania has all the ingredients to overcome, by the end of 2026, the fiscal-budgetary context it is currently going through, through a well-developed plan and through consistency. This is the period considered the most difficult, the minister said at a business forum.
Alexandru Nazare: “All the measures in package 1 and package 2 are measures that aim to return to the budgetary trajectory at the end of 2026, so that we have a credible plan and exit once and for all this excessive deficit procedure, which only minimizes our negotiating capacity in Brussels, affects our image, as a country, affects our capacity to act. We must be aware that, as long as we are in excessive deficit – and we have not been there for one or two years, we are not by accident, we have been there for five years already and we will spend 10 years in this procedure – we cannot maximize our chances of obtaining from Brussels what we need to obtain. Not just to absorb European funds, not just to maximize the volume of funds from a certain program, but to also become, alongside other European states of our size, architects of European programs.”
Alexandru Nazare emphasized that this budget adjustment should have been started and finalized 5 years ago, given that there was a 10-year process in which Romania received recommendations from the European Commission on this issue, until 2019. In 2020, we received a plan, a budgetary trajectory, and in 2024 another one, because we failed to stick to the previous one, this time we really have to maintain this budgetary trajectory, Minister Alexandru Nazare explained.
Attending the same event, a business forum, the chief economist of the National Bank of Romania, Valentin Lazea, predicted that inflation should fall by December next year to almost 3.5%, but only on condition that the measures to reduce the budget deficit are fully implemented. He explained that the current level of inflation, 9.9% per year, is very high and is mainly caused by the liberalization of electricity prices, which contributed 2.2% to the increase in inflation. Valentin Lazea also drew attention to the fact that another shock will follow in April next year, when gas prices will be liberalized, and the impact will probably be around 0.6%. (LS)
