Romania reduces budget deficit to 3.6% of GDP amid ongoing fiscal strains

Romania cut its first‑quarter budget deficit to 3.6% of GDP, down from 9% a year earlier, according to Eurostat data. The improvement was driven by higher taxes, increased excise duties, frozen public‑sector wages and pension cuts, as well as tighter fiscal pressure on the private sector.

The government targets a 6.2% annual deficit for 2026 and aims to meet the EU 3% ceiling in later years. Analysts warn that the current reduction relies on short‑term measures rather than structural reform of state enterprises, local administration and VAT evasion, which together account for tens of billions of lei in losses.

Meanwhile, interest‑rate costs linked to high inflation are estimated at €7.3 billion annually, and the 10‑year Romanian government bond yield fell to 6.59% after earlier volatility. Non‑government credit grew 1.9% in June 2026, reaching 473.7 billion lei. The CFA Society’s macro‑confidence index rose to 37.5 in June but remains in contraction territory, reflecting expectations of near‑zero GDP growth and public‑debt projections near the Maastricht 60% threshold (about 59% of GDP). Overall, Romania’s public finances have improved on paper, yet substantial fiscal challenges persist.