Tax Institute analysts project Romania’s ESA deficit at 8.7%-9.0% this year

Fiscal consolidation measures and the new deficit target of 8.4% of GDP based on the national cash methodology will bring the budget deficit based on the European ESA methodology to a level between 8.7%-9% of GDP, according to a report by The Tax Institute authored by tax experts Gabriel Biriș and Sebastian Șerban. Romania’s ESA deficit was 9.28% of GDP last year.

The differential to the cash deficit would be 0.3%-0.6% of GDP, compared to just over 0.6% of GDP in 2024.

The Tax Institute’s estimate for this year is based only on the trends seen over the past year in the differential between ESA and cash expressions of the public deficit.

Over the long-term periods, however, the two definitions tend to converge – except for a differential related to structural differences in classification (e.g., how ESA records capital transfers vs. how treasuries record them). In any case, deferred payments / late revenues accounted under ESA in the current financial year are expected to show up in the next year’s budgets accounted under the cash methodology, bringing the two definitions closer.

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