Romania’s general government budget deficit contracted by 4.2% y/y to RON 146 billion (EUR 28 billion) in 2025, according to preliminary data published by the Ministry of Finance. The deficit-to-GDP ratio contracted by 1 percentage point (pp) from 8.67% in 2024 to 7.65% in 2025, mainly driven by expenditure held under control by the executive under the package of budgetary measures legislated in December 2024.

The packages legislated in July 2025 and later during last year should drive the deficit, other things equal, close to 6.0% of GDP in 2026, according to rough consensus estimates.

The deficit thus came in below the 8.4% of GDP target envisaged under the revised planning (September 2025), but it was slightly above the 7.1% of GDP initial plan (December 2024). The figure was close to the 7.5% of GDP agreed with the European Commission in July 2025. 

For 2026, the government of prime minister Ilie Bolojan tentatively sketched a 6.2%-of-GDP gap, broadly seen as feasible. It would be slightly (0.2pp) smaller than the 6.4%-of-GDP target in the 7-year fiscal consolidation trajectory sketched under the excessive deficit procedure (EDP).

Out of the total deficit in 2025, RON 14.4 billion (0.75% of GDP) was prompted by operations with funds from the EU budget (expenditures for the projects financed under EU grants larger than transfers) – close to the RON 14 billion (0.9% of GDP) negative balance with EU funds in 2024. 

Filtering out this one-off element, the “clean” deficit was only 6.9% of GDP in 2025, down from 7.8% of GDP in 2024 but well above 4.9% in 2023. This figure stands for the operations from the national budget (including neither the transfers from the EU budget, nor the expenditures, mostly investments related to projects funded from EU schemes).

The interest on public debt surged by 39% y/y to RON 50 billion, or 2.6% of GDP in 2025 (2.1% of GDP in 2024). 

Filtering this element out of the “clean deficit,” this would result in a “primary clean deficit” of only 4.25% of GDP in 2025 – down from 5.75% of GDP in 2024 (but still above the 3.1% of GDP in 2023). This figure stands for the operations of the national budget, not including the interest paid on public debt. 

The total revenues to Romania’s public budget rose by 15.3% y/y (+23.4% y/y in Q4) to RON 663 billion (34.7% of GDP) in 2025. The revenues-to-GDP ratio rose from 33.7% in 2024 and 33.4% in 2023. However, this was due to 79% y/y stronger transfers from the EU budget (RON76 billion) while the domestic revenues to the national budget rose by only 10.3% y/y (+17.4% y/y in Q4) to RON 587 billion (30.7% of GDP, still above the 30.3% in 2024).

Notably, the net VAT revenues increased by only 10.7% y/y in 2025 (+18.9% y/y in Q4) despite the 7.1% y/y average inflation rate, but were dragged down by the retail sales volume edging up by under 1% y/y in the year. This modest advance of VAT collection (which improved in Q4) was despite the 2pp VAT rate hike in August.

For comparison, VAT revenues surged by 15.9% y/y in 2024 without any VAT rate hike and on moderate 5.5% y/y inflation (but driven by robust +8.6% y/y rise in retail sales volume). 

Romania’s total public expenditures rose by 11.2% y/y in 2025 (+11.4% y/y in Q4) to RON 809 billion: 43.4% of GDP, up from 41.3% of GDP in 2024. Filtering out the expenditures related to projects financed from EU grants, the expenditures rose by only 7.3% y/y to RON 718 billion, or 37.6% of GDP, down from 38.1% in 2024. 

The main source of savings was the payroll, which increased by only 1.2% y.y in 2025 (-9.0% y/y in Q4) to RON 168 billion or 8.8% of GDP, down from 9.4% of GDP in 2024 but still up from 8.3% of GDP in 2023.

iulian@romania-insider.com

(Photo source: Vlad Ispas/Dreamstime.com)