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The trap behind Romania’s historic deficit reduction: Economists warn of a huge interest bill
🇷🇴 Romania /Economy & Trade

The trap behind Romania’s historic deficit reduction: Economists warn of a huge interest bill

From Adevărul · () Romanian

Translated from Romanian and summarized by DistantNews. Read the original for the full story.

At a glance

Analysis Named sources Context piece
  • Romania’s budget deficit reached 48.08 billion lei in the first seven months, down from 76.44 billion lei a year earlier, reducing the deficit-to-GDP ratio from 3.99% to 2.34%.
  • Economists welcomed lower personnel spending but warned that the result partly reflected European Union grants and may not hold if Romania misses PNRR targets.
  • Rising public debt and interest payments could keep Romania at risk of a sovereign credit-rating downgrade.

Romania’s budget deficit has fallen sharply on paper, but economists say the improvement does not remove the pressure building in public finances.

The deficit stood at 48.08 billion lei after the first seven months of the year, compared with 76.44 billion lei during the same period in 2025. As a share of gross domestic product, it declined from 3.99% to 2.34%.

It is an achievement that the deficit has fallen so much. Personnel spending fell by 4%, and that is an important correction. The government paid much closer attention to spending.

— Adrian CodirlașuHe assessed the early-year budget figures and the reduction in personnel costs.

Adrian Codirlașu described the reduction as a strong performance and pointed to a 4% fall in personnel spending. “It is an achievement that the deficit has fallen so much. Personnel spending fell by 4%, and that is an important correction. The government paid much closer attention to spending,” he told Adevărul.

The reduction is important, but be careful, we had non-reimbursable money. Spending must continue to be controlled and reduced.

— Adrian CodirlașuHe warned that European grants helped the deficit figures.

But Codirlașu cautioned against treating the figures as a lasting turnaround. Romania benefited from non-reimbursable European funds, he said, while the country had received only about half of the money in cash despite securing more than 90% of the funds allocated to projects. “The reduction is important, but be careful, we had non-reimbursable money. Spending must continue to be controlled and reduced,” he said.

The next budget figures could look worse if Romania fails to meet targets under the National Recovery and Resilience Plan. “The budget deficit could be higher because we will not receive all the money from the EU if we do not meet the PNRR targets,” Codirlașu said.

The budget deficit could be higher because we will not receive all the money from the EU if we do not meet the PNRR targets.

— Adrian CodirlașuHe discussed the risk to future budget execution if Romania misses recovery-plan targets.

He also warned that interest costs and public debt had increased. “As for interest expenses, they have increased compared with the previous period, public debt has also increased and interest expenses will continue to rise. It is no longer sustainable to borrow,” he said. Codirlașu added that Romania still faced a high risk of a downgrade and cited a warning from Moody’s.

As for interest expenses, they have increased compared with the previous period, public debt has also increased and interest expenses will continue to rise. It is no longer sustainable to borrow.

— Adrian CodirlașuHe warned about the fiscal consequences of higher debt and borrowing costs.
About this summary

Originally published by Adevărul in Romanian. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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