The Parliament of Romania is expected to give its vote on the 2026 budget plan on March 20 after the ruling coalition’s parties reached an agreement to finance the RON 1.1 billion (0.05% of GDP) “solidarity package” required by the Social Democrats (PSD) and keeping the budget deficit within the 6.25%-of-GDP limit as requested by prime minister Ilie Bolojan. The ruling coalition’s parties agreed to trim down the RON 5 billion (EUR 1 billion, 0.25% of GDP) budget set aside for the High Court of Cassation and Justice (ICCJ) – a compromise that prompted protests from the High Court that warned it would sue the authorities for this.

The compromise was reached by reducing the budget earmarked for paying magistrates the retroactive wage hikes ruled by courts in the past – an element that initially forced the executive to increase the High Court’s budget by 50% from 2025. The supplementary funds were intended to pay outstanding amounts to magistrates, resulting from increases established retroactively by court decisions. 

The ruling coalition has decided to postpone some of these payments. The money will be redirected to the social assistance package promoted by the PSD. The amendment is financed by "reducing the personnel expenses of the High Court and the Public Ministry", including the amounts related to court decisions.

The High Court, headed by Lia Savonea, already warned in a public statement that it will take the Government to court to recover salary arrears, according to B1.

The joint chambers of the Parliament began debates on the 2026 budget law close to midnight, after the expert committees cleared the chapters of the state and social security budgets on March 19, according to Digi24 and B1. The final vote for the 2026 budget law is scheduled for Friday, March 20.

The budget-finance committees of the two Chambers adopted, on the afternoon of March 19, the draft state budget and the social security budget for 2026. Following the agreement reached on the same day in the morning, the budget passed with 38 votes against 13.

PM Bolojan assured that the budget plan, as drafted by the Finance Ministry, is a cautious one and does not overestimate the incomes as it happened in the past; but the underlying macroeconomic outlook turned highly volatile, and implementation risks as well as intrinsic structural weaknesses still exist. For instance, the budget assumes 1% economic growth and 6.5% average inflation, assumptions already unrealistic, while also estimating that the VAT collection would increase to 7.6% of GDP from 7.0% in 2025 – which entirely depends on a better collection rate since the consumption is unlikely to boost. 

PM Bolojan highlighted the necessity of reducing the budget deficit, for the second consecutive year, as the public debt neared 60% of GDP at the end of 2025, and the interest on public debt has doubled within four years to RON 60 billion (3% of GDP) this year. 

The Fiscal Council previously issued a favourable opinion on the budget plan, confirming it is consistent pending implementation, but also said adverse external conditions could derail it. The Fiscal Council also commented on the need to boost revenues as a medium-term strategy for reaching sustainable deficits, whereas the consolidation is predominantly achieved through cutting expenditures in 2026. 

The public expenditures, after filtering out the investments (boosted by the EU transfers under the RRF and MFF), will drop to 34.3% of GDP this year from 35.2% of GDP in 2025. This will be achieved mainly by cutting the social security expenditures to 12.2% of GDP in 2026 (slightly more after the 0.05% of GDP solidarity package agreement) from 13.1% in 2025, and the personnel budget from 8.8% of GDP to 8.2% of GDP.

iulian@romania-insider.com

(Photo source: Inquam Photos/Octav Ganea)