An outlook on the 2025 budget
By the end of this week, authorities are expected to pass the budget for 2025
Corina Cristea, 30.01.2025, 14:00
In a complicated economic context, where public debt has exceeded 54% of the GDP, and the budget deficit is approaching 9% of GDP, drawing up Romania’s 2025 state budget is no easy task. Especially since two of the main international rating agencies have downgraded the country’s rating from stable to negative. Based on a deficit of no more than 7% of the GDP, the draft budget is expected to be approved by the Government by the end of the week. The bill will then be submitted to Parliament for debate and approval. According to the document, authorities must first cut public spending. Thus, the budget of the Presidential Administration will reportedly be slashed by 10%, that of the Senate by 5%, and that of the Chamber of Deputies by 9%.
The increase in pensions remains under debate, given that the Finance Ministry claims this will not be possible this year. Finance Minister, Tánczos Barna, says the 2025 draft budget, which many regard as moderate, ensures the payment of salaries and pensions and the development of settlements. “The budget stipulates the construction of highways for 20 million Romanians. The budget allots funds for the development of rural infrastructure for all Romanians. We have funds for all Romanians to pay salaries in Education, in the Ministry of the Interior, in all ministries that need to pay salaries, at the level of 2024. We have the proper funds to pay all pensions (…) at the value of November-December 2024, which will remain in place month by month throughout 2025”, the Romanian official pointed out. Minister Barna also mentioned that the budget of the Defense Ministry will be higher compared to 2024 and that the budgets of other ministries, such as the Environment, Health, Education and Transport, will also increase.
To achieve more flexibility, personnel expenses will be reduced in each institution, most of them seeing their budgets slashed by 5%, with the exception of Education, hospitals or Internal Affairs. With respect to loans, Tánczos Barna said the authorities are considering all possibilities in order to cover the budget deficit. “Romania borrowed a lot last year, it will borrow less this year and even less next year. We have a roadmap for reducing loans year by year, over the course of seven years”, Tánczos Barna added. Fortunately, Romania’s downgraded rating did not also change its rating in terms of investor appeal, which would have increased Romania’s borrowing costs. According to experts, skepticism persists, however, among investors and rating agencies, as a result of political instability and delays in implementing structural reforms. (VP)
