Romania’s 2025 budget: A bid for stability amid political and economic challenges
<p>Romania’s 2025 budget aims to restore fiscal balance after years of widening deficits, but analysts warn that success hinges on political stability and global economic conditions, according to a new report from the Romanian Economic Monitor (RoEM), a research project of the Babes Bolyai University in Cluj-Napoca.&nbsp;</p>

<p>The government projects a budget deficit of 7% of GDP, down from 8.6% in 2024, signaling its commitment to fiscal consolidation. However, the plan relies on moderate economic growth (2.5%) and an inflation target of 4.4%, which analysts say could be at risk from unforeseen economic shocks.&nbsp;</p>

<p>“The budget relies on realistic assumptions, but external and internal uncertainties could derail these projections,” said <strong>Levente Szász</strong>, prorector at Babeș-Bolyai University and coordinator of the RoEM research team.</p>

<p>The government aims to increase revenues from 32.6% to 34.9% of GDP, mainly through higher tax collection and better absorption of EU funds. Spending will rise only marginally, from 41.2% to 41.9% of GDP, with planned cuts in public sector operational costs while preserving wages and pensions at 2024 levels.&nbsp;</p>

<p>“A key strategy is shifting public investments towards EU-funded projects, which could offset cuts in state-funded investments and boost economic growth,” Szász added.</p>

<p>Despite efforts to close the fiscal gap, Romania’s tax-to-GDP ratio remains one of the lowest in the EU, trailing the EU average by over 5 percentage points.&nbsp;</p>

<p>The RoEM report highlights that structural issues in tax collection, rather than low rates alone, are a major constraint on revenue growth.&nbsp;</p>

<p>Analysts identify two critical risks that could jeopardize Romania’s budget targets: political instability - if the government fails to maintain fiscal discipline, the deficit could exceed 7%, undermining investor confidence and triggering credit downgrades – and external pressures - a slowdown in Germany’s economy and potential US trade tariffs could hurt Romania’s exports, adding pressure to the budget.</p>

<p><em>andrei@romania-insider.com</em></p>

<p><em>(Photo source: PR)</em></p>