All the members of the ruling coalition in Romania reached full agreement, on February 23, on the key bills of downsizing public administration and of economic relaunch and agreed to cut the property taxes collected at local levels under the newly enacted law, considered by some mayors as excessive in some cases, according to a PNL press release. 

On February 24, after the two bills (public administration, economic relaunch) receive opinions from the Social Economic Council and the Legislative Council, the government meeting will take place in which the two respective emergency ordinances will be adopted, according to sources attending the coalition meeting consulted by Hotnews.ro. It is possible that a new coalition meeting will take place on Wednesday, February 25, before prime minister Bolojan goes to Brussels to meet with European Commission president Ursula von der Leyen.

At the end of last week, PM Bolojan stated in an interview with TVR that the coalition debates on the 2026 budget should be wrapped up by the end of this week. However, the Social Democratic Party (PSD) insists on a social package as a precondition for supporting any form of the general government budget. The package includes one-off payments to low-income pensioners.

In terms of budgetary impact, the public administration law and the economic relaunch package (tax breaks, accelerated depreciation, tax credit, other allowances) were supposed to cancel each other – but this is no longer guaranteed after the final touches on the two bills. Furthermore, the allowances on property taxation will also bear a cost on this year’s budget, which has not sketched yet.

PM Ilie Bolojan announced a 6.2%-of-GDP deficit target for this year (cash terms). The absorption of Resilience money (grants) and cohesion funds, some EUR 12 billion (3% of GDP) altogether, is critical for the final deficit this year.

An agreement was unanimously reached on a set of measures “to modernize the state, stimulate the economy and fulfill Romania's commitments at the European level,” the press release issued by the Liberal Party after the coalition meeting states, hinting a supplementary broad agreement on speeding up the actions for absorbing the Resilience Facility (RRF) money – some EUR 10 billion in grants and loans this year.

As regards the property taxes, a reduction in the rates for buildings older than 50 years, and reduced property taxes for people with serious or severe disabilities were agreed upon. 

Thus, the tax on buildings older than 100 years will be reduced by 25%, and for buildings between 50 and 100 years old, it will be reduced by 15%. People with severe disabilities will benefit from a 50% reduction in the tax on buildings and vehicles, and people with severe disabilities will benefit from a 25% reduction, but with the introduction of value ceilings.

Regarding the central and local administration reform, the coalition decided to adopt, in a government meeting, the package that aims to reduce institutional overlaps and streamline the internal processes of institutions. The goal of the reform is to increase the quality of administrative acts and reduce state costs, the press release reads. The goal, repeatedly mentioned by prime minister Ilie Bolojan, was to cut the personnel expenses envelope by 10% overall, by setting tighter personnel limitations by category of local administration units.

Not much is known about the economic recovery package. The Ministry of Finance and the Ministry of Economy will finalise the last technical details necessary so that it can be submitted to the government for adoption simultaneously with the package dedicated to central and local administration, the coalition’s press release reads.

The broad structure of the 2026-2032 economic relaunch package, with a total budget of EUR 5 billion, was previously announced. Analysts pointed to overlaps with the existing schemes, while central bank governor Mugur Isarescu expressed disapproval of more subsidies. 

Finance minister Alexandru Nazare, over the weekend, mentioned tailored support for strategic investment projects of over EUR 200 million available to both local and foreign investors, Cursdeguvernare.ro reported. But the package will also include measures aimed at small investors and entrepreneurs, minister Nazare explained.

iulian@romania-insider.com

(Photo source: Inquam Photos/Octav Ganea)