Rapidly escalating Romanian public debt remains below the European Union's average level.
In the first quarter of 2025, Romania's public debt-to-GDP ratio increased by 4.1 percentage points (pp), outpacing the EU average growth of just 0.2pp. Despite this rapid rise, Romania's public debt level of 55.8% remains below the EU average of 81.8%.
Several factors contribute to Romania's growing debt. The country recorded a budget deficit of 8.65% of GDP in 2024, with an expected deficit close to 8.0% in 2025. This large fiscal shortfall necessitates substantial government borrowing, driving debt growth.
In the first four months of 2025 alone, public debt grew by about EUR 9.9 billion, following a record EUR 36.1 billion increase in 2024. These large absolute increases in debt indicate sustained borrowing.
Romania's economic growth remains low, with only 0.3% growth forecasted for 2025 and 1.3% for 2026. Slower growth limits revenue gains and prolongs fiscal imbalances, necessitating continued debt increases.
While countries like Greece and Italy have higher debt levels, their debt growth rates are currently lower or even declining. Romania's relatively moderate initial debt ratio allows for faster percentage growth when deficits remain large.
Estonia also has a low public debt-to-GDP ratio at the end of Q1 2025, with a ratio of 24.1%. Other countries with low ratios include Denmark (29.9%), Bulgaria (23.9%), and Luxembourg (26.1%).
On the other hand, Italy has the second-highest public debt-to-GDP ratio at 137.9%, followed by France (114.1%) and Belgium (106.8%). Spain holds the fifth-highest ratio at 103.5%. Twelve Member States, including Greece, Cyprus, and Portugal, registered a decrease in their debt-to-GDP ratio at the end of Q1 2025.
Independent analysts forecast Romania's debt could exceed 60% of GDP soon and continue growing to around 66% by 2026, underscoring a challenging fiscal outlook. This trend highlights the need for careful management of Romania's public finances to ensure sustainable growth and maintain economic stability.
The continued increase in Romania's public debt is driven by the large fiscal shortfalls and substantial government borrowing in the industry of finance. As a result, independent analysts expect Romania's debt to exceed 60% of GDP and continue growing, emphasizing the need for careful management of public finances in the finance industry.
