Romania from inflation to budget deficit
Romania’s macroeconomic situation remains fragile
Bogdan Matei, 26.06.2026, 13:50
The National Bank’s chief economist, Valentin Lazea, warns that Romania currently has the highest inflation and the largest budget deficit in the European Union, and that the country’s public debt will exceed the 60% threshold of the Gross Domestic Product this year, which could jeopardize the country’s credit rating. With inflation at 9.7% and a deficit of 7.9% at the end of last year, there is always the danger that the country could be downgraded to “not recommended for investment,” that financing from foreign capital markets could dry up, and that living standards could face a drastic decline, the central bank expert says bluntly.
In a presentation delivered at the conference of the Association of Financial and Banking Analysts and quoted by the media in Bucharest, he called on political parties to accept a political-economic pact that would require all future governments not to exceed certain ranges for macroeconomic indicators. “It is imperative to set targets for inflation, the budget deficit, and economic growth; targets that, once achieved, must be adhered to by any government, regardless of its ideological orientation,” Lazea insists.
“It’s not difficult, if we abandon populism and start respecting the population by educating it, instead of stringing it along,” concludes—in a pedagogical tone—the chief economist of the National Bank of Romania (BNR), at a time when, otherwise, Romania is adrift in political uncertainty and lacks a government with full powers, after the executive team led by Liberal Ilie Bolojan was dismissed by Parliament on May 5 through a motion of no confidence. Alexandru Nazare, the Minister of Finance—currently unaffiliated with any political party in the interim government, but formerly both a member of the National Liberal Party (PNL) and an expert on the National Bank’s team—is the man bringing the good news. He has announced that the budget deficit has been cut nearly in half compared to 2025, falling to 1.75% of the Gross Domestic Product after the first five months of the year, down from 3.35%.
In a post on his Facebook page, the minister states that discussions with international rating agencies ahead of the new reports assessing Romania will take place in the coming period, and developments in the current budget execution will demonstrate Bucharest’s ability to continue fiscal consolidation. The decline in the budget deficit is a breath of fresh air for the country, ahead of the July discussions with the rating agencies Moody’s and Fitch, according to economic consultant Adrian Negrescu.
He adds, however, that the political turmoil creates a strong perception of instability regarding the situation in Romania and that reducing the budget deficit is not enough. Only by reducing tax evasion and broadening the tax base will we be able to emerge from this dire situation, which, as the European Commission has estimated, could lead us in the coming years to a financial situation befitting a bankrupt country,” concludes Adrian Negrescu. (MI)
