The Romanian government approved on March 12 the draft budget plan for 2026, the document to be sent to Parliament for debate and adoption, announced prime minister Ilie Bolojan in a press conference. The government also approved the increase in the minimum statutory wage as of July – a request made by the Social Democratic Party (PSD) and perhaps a concession made by PM Bolojan for having the budget plan endorsed.

In the Economic and Social Committee (CES), the business community’s representatives issued a positive review of the government’s budget plan, while the unions and civic society gave a negative review. The employers’ association noted that the budget for compensation owed to energy suppliers under the price capping mechanism may be underestimated.

The Fiscal Council said that the 2026 budget plan is consistent with a 6.25% of GDP deficit this year (cash), unless the global macroeconomic circumstances deteriorate significantly, and pending implementation, which remains problematic. The Fiscal Council also pointed to the fiscal consolidation being predominantly operated on the expenditures side this year – while it should be operated on the revenues side, on a medium-term perspective.

The Social Democratic Party (PSD) has expressed constant criticism against the so-called “austerity” enforced by PM Bolojan, but it is likely to approve the 2026 budget plan since the prime minister demonstrated flexibility (including by raising the minimum wage) at the cost of reforms. PSD president Sorin Grindeanu announced a meeting of the party’s leading body, the permanent National Bureau, scheduled on March 15 to decide on possible amendment proposals to be filed in Parliament. 

Grindeanu went as far as saying that the support for the budget bill in parliament is not granted yet and may depend on the evaluation carried out on March 15 and possibly on the amendments required. Labour minister Florin Manole specifically mentioned a lower nominal social security budget and uncertain financing of the “solidarity package” consisting of one-off payments to low-income recipients of public pensions (that have remained constant during 2025 and will remain so this year).

The budget consolidation planned by PM Bolojan is more ambitious than the 7-year consolidation plan approved by the European Commission in January 2025. According to the document prepared by the Ministry of Finance, the budget deficit is estimated at 6.2% of Gross Domestic Product (GDP) in 2026 (cash terms), equivalent to approximately RON 127.7 billion. The deficit under the European Union’s ESA methodology would be, however, only 6.0% of GDP (compared to 6.4% under the 7-year plan approved in January 2025). 

Romania’s GDP is forecast at RON 2,045 billion (some EUR 400 billion) in 2026, assuming 1% GDP growth and 6.5% average rise in consumer prices. Analysts believe the government's nominal forecast may be accurate, but as a result of a combination of higher inflation and lower economic growth.

For 2027, the authorities estimate a reduction in the deficit to 5.1% of GDP, cash (5.2% of GDP under ESA – versus 5.2% under the 7-year plan).

iulian@romania-insider.com

(Photo source: Inquam Photos/Octav Ganea)