Head of Romania’s Fiscal Council warns against reversing fiscal consolidation

“And that is why we must continue the fiscal-budgetary correction. We must try to use the structural and cohesion funds as best as possible. Let's be more careful with the investments we make, because some are nonsense, so they do not have good effects for the economy,” Dăianu said, according to Economedia.ro.

He also called for continued reforms and stronger efforts to fight corruption and what he described as “diffuse but existing” state capture, which he said was hindering the performance of the public sector.

Dăianu said that indexing pensions and public-sector wages in January could be possible, but argued that a VAT cut would be inappropriate at this stage. Both measures are included in the programme of prime minister-designate Siegfried Mureşan, but are conditional on the fiscal space remaining after the consolidation measures are implemented.

Dăianu also argued for the adoption of a new Wage Law for the public sector, although he acknowledged that its inclusion in the 2027 budget planning was unlikely.

Romania failed to adopt the law under the Recovery and Resilience Facility (RRF), resulting in the loss of EUR 770 million in grants. President Nicuşor Dan said in August that the law could still be adopted by the end of the year, a timeline that appears highly ambitious given the current political situation.

Regarding fiscal policy for 2027, Dăianu said that the budget deficit could be reduced without introducing new taxes or duties.

At the same time, he warned against even discussing a VAT reduction at this stage, arguing that it could send the wrong signal to financial markets.

“Even just talking about a reduction in taxes and duties at this moment is not the right signal. We need credibility. There is a credibility deficit in the economic policy in Romania that has failed, which has led to very large deficits, which were inevitable to be corrected,” Dăianu said.

He warned that any reversal of the fiscal consolidation measures could make it more difficult for Romania to finance and refinance itself, potentially forcing the authorities to adopt tougher measures at a later stage.