Romania's new government to endorse fiscal austerity package by end-2024

The new executive in Bucharest has already agreed on the emergency fiscal corrective package aimed at preventing major fiscal slippage in 2025 and is set to publish the document on December 27.

The document prevents the immediate enforcement of measures (rise of pensions and some wages in the budgetary sector) that would have generated supplementary public expenditures resulting in tight constraints on the 2025 budget planning. If these laws come into force, the budget deficit for 2025 could exceed 14% of GDP, according to analysts quoted by Cursdeguvernare.ro, which outlines the main provisions of the corrective package.

One such provision, relevant to the pressures faced by the executive in its effort to cut public spending, regards the holiday vouchers paid to all employees in the budgetary sector – some EUR 300 per year. The government suspended this particular benefit for 2025 but may reintroduce it by the 2025 budget planning law. Similarly, the 12% indexation to inflation of public pensions, envisaged for January 2025, was suspended – but it will probably be enforced after the year's overall budget plan is sketched.

Other measures included in the corrective package are more permanent. The money owed to categories of employees, mainly magistrates, following court trials will be spread over a period of five years with fair payment of interest. Only 5% of the total money owed will be paid in 2025 – with the largest payment burden (35%) envisaged for the fifth year.

(Photo source: Gov.ro)