Romania posted the widest general government budget deficit among the European Union member states, 9.3% of GDP (6.6% in 2023) – nearly three times the EU average (3.2%), according to data published by Eurostat using ESA methodology. On the upside, the country's public indebtedness, although rising at a fast pace, remains well below the EU’s average.

Romania's 2024 public budget gap is well above the 7.9%-of-GDP estimated by the government last October as the starting point for the seven-year fiscal consolidation plan. At that time, the government estimated the cash deficit at 8.0% of GDP, compared to 8.6%-of-GDP estimated at the end of the year.

Romania’s government expenditures-to-GDP ratio rose by 2.9 percentage points from 40.6% in 2023 to 43.5% in 2024 well below the EU average of 49.6%. Its revenues also lagged behind the 46.5% of GDP EU average, improving only marginally from 34.0% in 2023 to 34.1% in 2024.

In 2024, all member states, except Denmark (+4.5% of GDP), Ireland and Cyprus (both +4.3%), Greece (+1.3%), Luxembourg (+1.0) and Portugal (+0.7%), reported a deficit. The highest deficits were recorded in Romania (‑9.3% of GDP), Poland (-6.6%), France (‑5.8%) and Slovakia (-5.3%). 12 member states had deficits equal to or higher than 3% of GDP.

When it comes to the public debt-to-GDP ratio, Romania stands out with a moderate level of 54.8% of GDP, compared to the EU’s 81%-of-GDP average. The ratio, however, increased significantly from 48.9% in 2023.

Romania's Ministry of Finance said in a response to the Eurostat release that it is sticking with the 7%-of-GDP budget deficit this year (under both cash and ESA methodologies) and with the seven-year fiscal consolidation plan agreed with the European Commission under the Excessive Deficit procedure.

“Romania reaffirms its commitment to meet the deficit of 7% of GDP in 2025 [under both cash and ESA methodologies] and, at the same time, to continue the fiscal consolidation trajectory in the coming years, as provided for in the Medium-Term National Budgetary-Structural Plan agreed with the European Commission,” the ministry’s statement reads.

It did not provide details about how the wider-than-estimated fiscal gap last year affects the consolidation plan.

A fiscal corrective package is expected after the May presidential elections, even though Minister of Finance Tanczos Barna has repeatedly rejected the option of tax rate hikes this year (yet also stressing that this depends on the budget execution in line with the plan).

The medium-term fiscal plan under the Excessive Deficit Procedure has among its objectives cutting the budget deficit to 2.4% in 2031 and bringing the public debt to GDP ratio under 60% by the end of the seven-year period (after possible deviations above the benchmark meanwhile). 

The plan, endorsed by the European Commission, starts with an estimate of around 7.9%-of-GDP ESA public deficit in 2024 and an adjustment to 7% in 2025. The 2024 deficit, wider than assumed in October, should in principle result in an overall revision of the fiscal consolidation plan – defined in terms of annual dynamic of the net public expenditure (no more than +5.1% y/y in 2025, 4.9% in 2026, 4.7% in 2027, 4.3% in 2028, 4.2% in 2029 and 3.9% in 2030, under the plan drawn up in October). However, the Ministry did not address this issue in its press release.