From budget deficit to governmental debt

National budget deficits in the EU narrowed to 3.2%, but Romania reported a negative 9.3% at the end of 2024

Corina Cristea, 23.04.2025, 14:00

The Romanian finance ministry reiterates Romania’s commitment to meet the 7% of GDP deficit target at the end of the year, and promises to stay on this trend in the coming years, as stipulated in the plan agreed with European Commission officials.

The clarification comes as, according to new Eurostat data, Romania had the largest budget deficit in the EU last year, 9.3% of GDP, above the figure announced by the government. The finance ministry lists among the main causes for this situation the amounts owed by public sector institutions at the end of the year, which implied higher expenses that were not included in the initial calculations.

Romania is not the only EU member state with a deficit above the 3% ceiling set by European legislation and to which Bucharest has been trying to return for years. Eurostat data show that national budget deficits in the European bloc fell last year from an average of 3.5 to 3.2%. After Romania, Poland had the largest deficit, 6.6%, but the country had higher defence spending – over 4% of GDP, being the NATO state with the highest share of GDP earmarked for this sector. Other countries with large deficits are France (5.8%) and Slovakia (5.3%). At the opposite pole, 6 states reported a budget surplus – Denmark, Ireland, Cyprus, Greece, Luxembourg and Portugal.

In terms of the government debt to GDP ratio, Romania is in a good situation, with only 54.8%, below the EU average. The highest debts are reported in Greece (153%), Italy (135%), followed by France, Belgium and Spain, all with over 100%.

Financial news also came from the IMF on Tuesday. Amid uncertainties caused by the tariff war initiated by the US president Donald Trump, the International Monetary Fund revised its estimates regarding the growth of the Romanian economy this year. The Fund predicts a drop from 3.3%, as forecast in October, to 1.6%, with the growth forecast for 2026 standing at 2.8%.

In fact, the international financial institution estimates that the global economy will decline drastically this year, more precisely at an annual rate of 2.8%, 0.5% below the Fund’s early-year estimates. Only a modest 3% increase is likely in 2026, the IMF says, while progress in bringing inflation under control will also be affected. The economic slowdown will be particularly severe for the US economy, which will grow by only 1.8 percent this year, the International Monetary Fund also estimates. (AMP)