Romania Targets 8.4% GDP Deficit in 2025, Tax Institute Says
Romania's fiscal outlook has been detailed by The Tax Institute, with a new deficit target of 8.4% of GDP under the national technology methodology. The author of the report remains unidentified.
Last year, Romania's ESA deficit stood at 9.28% of GDP. To reach the new target, the institute suggests fiscal consolidation measures. However, these steps are anticipated to bring the budget deficit to between 8.7%-9% of GDP under the European technology methodology.
Over time, the ESA and technology definitions of the deficit generally converge, excluding structural classification variations. The Tax Institute's estimate for this year is based on recent trends in the difference between these two expressions of the public deficit. This year, the difference is projected to be 0.3%-0.6% of GDP, a notable improvement from the 2024 projection of over 0.6% of GDP.
The Tax Institute's report sets a new deficit target of 8.4% of GDP under the cash app methodology. Although fiscal consolidation measures are expected to bring the ESA deficit closer to this target, the actual deficit is projected to remain above the target under the ESA methodology. The difference between the two deficit definitions is expected to narrow this year but will continue to influence Romania's fiscal outlook.
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