Romanian FinMin on budget revision: 7.1%-of-GDP initial target was not realistic

Speaking of the budget revision during his August 13 press conference, minister of finance Alexandru Nazare said that the consultations with all ministries began several days ago, but no decision on supplementing the individual budget of any institution/ministry can be taken before having a broad image of the entire public sector.

In any case, the 7.1% of GDP target set by the past government when drafting the 2025 budget planning was not realistic, and many institutions/ministries were earmarked with visibly insufficient funds for functioning the entire year.

Under the budget planning, the deficit was supposed to be only 1.2% of GDP in the last quarter of the year, when historically Romania pays for the public works contracts and consequently displays wide deficits.

Minister Nazare said that the new target for the 2025 budget deficit "will not start with 7," meaning it would be at least 8% of GDP.

On a positive note, minister Nazare announced that the funding for the A7 motorway, required in particular by the Social Democrats (PSD), was settled from grants under the Recovery and Resilience National Plan (PNRR).

But the problems faced by the Romanian government in keeping the deficit this year within reasonable limits are more. Among others, the government owes RON 6-7 billion (EUR 1.2-1.4 billion, or over 0.3% of GDP) to the electricity suppliers, under the price capping scheme.

(Photo source: Facebook/Alexandru Nazare)