Romania cuts state expenses

In their efforts to reduce the budget deficit, state institutions in Romania spent almost 400 million lei less on goods and services in the first two months of this year compared with the same period last year.

Sorin Iordan, 27.03.2025, 13:50

The rising budget deficit has prompted the Romanian administration to take aggressive measures to cut state expenditure. Cuts were made to budgets, bonuses, facilities and even personnel.

Finance minister Tánczos Barna says the first effects have already become visible as state institutions spent 380 million lei, the equivalent of over 76 million euros, less on goods and services in the first two months of this year compared with the same period last year. He said state budget expenses dropped by 5% and those of local authorities by 4%. Barna also emphasised that although VAT returns rose to a little over 5 billion euros in the first two months of the year, addressing the budget deficit is a long process. He said the government must remain firmly committed to keeping the budget deficit below 7% of GDP, as agreed with the European Commission, and to continue to stimulate economic growth through investments.

Recently, he said cutting state employee expenses is a priority for the government, adding that the reorganisation of public institutions will continue over the next two years in order to achieve a leaner and more efficient state apparatus. Tanczos Barna:

“We have cut staff expenses by 5%, apart from the 5% cut in the budget for administrative expenses, so that we can meet the 7% deficit target by the end of the year. In 2026 an 2027, as well, institutions must continue on the path of digitalisation, efficiency and reduction of their current expenses. I’m not referring to cuts in personnel salaries, but in personnel expenses.”

According to the finance minster, the execution of the general consolidated budget ended in January and February this year with a deficit of some 30 billion lei, accounting for 1.58% of GDP, compared with 1.64% of GDP in the first two months of last year. This year’s budget is based on a 2.5% economic growth level and a budget deficit of 7% of GDP.

In 2024, the budget deficit rose to 8.65% of GDP, from 5.61% in 2023. In this context, Romania launched a new Eurobond issue, the second this year, in order to finance its deficit. Last month, the state raised 2.8 billion euros and 1.25 billion dollars from issuing Eurobonds in the two currencies. This year, the government plans to borrow 13 billion euros from international markets, having raised a record 18 billion euros last year.