Budget deficit must be reduced

The 2025 draft budget will be built on a 7% deficit, without additional tax increases, says Finance Minister Tánczos Barna.

Mihai Pelin, 10.01.2025, 14:04

The 2025 draft budget will be built on a 7% deficit, without additional tax increases, says Finance Minister Tánczos Barna.

Romania ends 2024 with a budget deficit of 8.6%, according to data from the Ministry of Finance. Experts point out that this is a huge deficit level and is among the highest in the EU. Economic growth is not robust, as it is based on large internal and external imbalances, and the Government must try to keep spending under strict control, experts also say. The deficit must decrease this year, which is a real challenge, says Finance Minister Tánczos Barna. He specified that the objective for 2025 is the wise management of public money, given that 2024 was a difficult year for Romania, from all points of view. Tánczos Barna: “It was a year with many elections, it was a year in which pensions were recalculated, salaries were increased in several areas and investments were supported with unprecedented amounts. I believe this is the most important element of the 2024 budget, even if the year ended with a deficit of 8.6%. The year 2025 will mean a 7% deficit and, indeed, this is a challenge given that we want to keep the amounts allocated for investments and pay salaries at the level of November and pensions at the level of November 2024. We have to support the education system, the health system, all public institutions, to fit into this deficit. At the same time this must also be the year in which we begin to create that flexible state, which does not collect taxes to become obese and to hire even more and provide the same services with a larger number of employees, with high, high costs.”

Tánczos Barna recalled that, in 2024, Romania made a 7-year commitment to the European Commission, and at the end of this timeframe it must reach a 3% deficit. He also said that, in drafting the state budget for 2025, the authorities are not considering an increase in VAT or any changes to the payroll tax. The minister mentioned that the draft budget will be presented to the governing coalition by January 27, to be adopted by Parliament in the first week of February.

We recall that the Government led by the Social Democrat Marcel Ciolacu recently approved an emergency ordinance regarding some fiscal-budgetary measures in the field of public spending, to substantiate the general budget for 2025. The measures have sparked dissatisfaction among the private sector, which complains about legislative unpredictability and the change of tax laws from one day to the next. In turn, the unions signal the fact that protests will be held in the upcoming period and have asked the Ombudsman to challenge the article that provides for the freezing of pension indexation at the Constitutional Court. Having taken effect on January 1, the ordinance also provides for a salary freeze, the elimination of some tax incentives and the restriction of certain benefits.