The International Monetary Fund (IMF) expects Romania to follow its agreed fiscal consolidation path only in the short term, with a likely slowdown starting in the 2028 electoral year and no return to a deficit below 5% of GDP through 2031, according to the latest World Economic Outlook (WEO) published on April 14.

Under the IMF scenario, Romania’s general government deficit is projected to decline from 7.64% of GDP last year to 6.25% in 2026, broadly in line with the government’s target. Further consolidation is expected in 2027, with the deficit seen at 5.76% of GDP - slightly above the 5.7% target agreed under the EU’s Excessive Deficit Procedure (EDP).

However, the pace of consolidation is expected to slow significantly. After an adjustment of around 1 percentage point in 2026, the deficit reduction would halve to just 0.5 percentage points in 2027.

From 2028, the IMF anticipates a pause in consolidation efforts, coinciding with the electoral cycle and a planned rotation of the prime ministership to the Social Democratic Party (PSD) in 2027. The deficit is projected to remain broadly unchanged at around 5.75% of GDP in 2028, instead of declining toward the government’s target of 5.0% under the EDP trajectory.

This contrasts even more with the Romanian government’s fiscal strategy sketched alongside the 2026 budget plan earlier this year, which envisages a more ambitious adjustment (compared to EDP), with the deficit falling to 5.1% in 2027 and then to 4.2% in 2028.

The IMF expects consolidation to resume in 2029, but at a very slow pace. Over the 2029-2031 period, the deficit would be reduced by only 0.25 percentage points in total, reaching 5.25% of GDP by 2031 - still well above the EU’s reference threshold and more than double the 2.5% of GDP target set under the EDP.

As a result of persistently high deficits, Romania’s public debt is projected to continue rising. The IMF estimates gross government debt will increase from 61.9% of GDP at the end of 2025 to 63.9% in 2026 and further to 70.4% by 2031.

However, given that the latest official data places debt just below 60% of GDP at the end of 2025, the IMF’s projections may be subject to downward revisions. Even so, the overall trajectory suggests that Romania’s debt levels are unlikely to stabilise in the medium term.

iulian@romania-insider.com

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