Romania's general government budget deficit was around RON 145 billion or 7.65% of GDP last year under cash terms, larger than the 7.1% of GDP initial target and the 7.5% of GDP target set in July – but also below the 8.4% of GDP value set under the budget planning revised in September and endorsed by the European Commission. The figure cited by local media (Ziarul Financiar, Profit.ro) on January 20, if confirmed next week by official preliminary data, would mark a 1 percentage point improvement compared to the 8.65% of GDP deficit in 2024. 

Romania plans a deficit of 6.0%-6.5% of GDP in 2026, but the government's budget plan is expected to be submitted to lawmakers around mid-February.

The better-than-planned deficit achieved in 2025, besides a positive message sent to investors, has a very direct positive impact: lower financing needs this year, since higher reserves must have been left in the Treasury.

The government envisaged a RON 159 billion deficit (8.4% of GDP) in September and designed the financing accordingly (adding an extra RON 10 billion pre-financing for 2026). The RON 145 billion deficit is thus RON 14 billion (EUR 2.8 billion) lower than planned – with the unused financing supposedly saved for this year.

Treasury head Stefan Nanu, speaking on January 13 in Vienna, mentioned a value of the financing needs for this year inferior to the official estimate as of December – with the difference (over RON 10 billion) supposedly reflecting precisely those funds left unused in 2025.

In principle, better-than-expected fiscal consolidation should result in at least a better outlook assigned by the rating agencies to Romania's sovereign evaluation. A credible budget plan with a target of 6% of GDP would be supportive of such a positive development. However, the political uncertainty will remain high (and prevent a positive action) until the new prime minister, supposedly the head of the Social Democratic Party (PSD), takes over in April 2027 and pledges convincingly to further fiscal discipline. 

When it comes to the ESA deficit, calculated by the European Commission (EC) based on its own methodology (9.3% of GDP in 2024), it remains still unclear whether it was larger or smaller than the cash deficit. In 2024, the differential was caused by payments deferred for 2025. Normally, this should result in an ESA deficit lower than the cash deficit, particularly since the government assured in December that all the invoices issued by the contracts have been paid. Profit.ro, citing sources familiar with the estimates, however, indicated that the ESA deficit may remain above the cash deficit this year.

Both the revenues and expenditures have increased as a ratio to GDP in 2025.

The budget revenues have increased by 15% y/y in 2025, while the expenditures rose by only 11% y/y, according to the sources consulted by Profit.ro and Ziarul Financiar.

This would result in budget revenues accounting for 34.6% of GDP in 2025, up from 32.7% in 2024. However, part of this improvement was caused by stronger transfers from the EU budget. As of November, the transfers reached 2.9% of GDP, up from 2.1% of GDP in January-November 2024. 

Given the significant impact of the transfers from the EU budget, a better evaluation of the increase in endogenous budget revenues (excluding the transfers) will be possible only after detailed data is published.

When it comes to revenues, they increased to 42.3% of GDP from 41.3% of GDP in 2024 – also on stronger expenditures financed from the EU transfers (3.5% of GDP in January-November 2025, up from 2.8% in January-November 2024).

iulian@romania-insider.com

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