Romania's Financial Gap Expands to 3.4% of GDP During January-May Period

In preliminary figures, the government's cash-based budget deficit for the initial five months of the year amounts to 3.4% of the nation's GDP, as per reports by Profit.ro. This deficit ratio is in line with the equivalent period in 2024, which concluded the entire year at 8.65% under...

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2025 June 15 . 3:13 AM

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Government's Cash-Based Budget Deficit Revealed at 3.4% of GDP in Initial Five Months, as Per... — Government's Cash-Based Budget Deficit Revealed at 3.4% of GDP in Initial Five Months, as Per Profit.ro's Disclosure. This figure mirrors the deficit-to-GDP ratio during the same period in 2024, concluding the year at 8.65% under...

Romania's Financial Gap Expands to 3.4% of GDP During January-May Period

Laying Out the Numbers: Romania's Budget Deficit Tug-of- War

Let's dive into the nitty-gritty of Romania's general government budget deficit for the initial five months of the past few years and gauge how it stacks up against the targets.

Recent Budget Deficits on a Roller Coaster

2025: As of January-May, the budget deficit clocked in at a comparable 3.4% of GDP to the same period last year[1]. This amounts to roughly RON 64.3 billion (or nearly EUR 13 billion)[1]. Given the European Commission's and rating agencies' expectations of a 7% deficit[1], a 7.5% realization would be considered acceptably within bounds.
2024: By year's end, the deficit had reached an alarming 8.65% under cash terms and 9.3% under ESA terms[1]. For the first four months of 2024, the deficit mirrored the same period in 2025[4].
2023: The general government deficit ballooned to 6.6% of GDP, a substantial increase from the 9.3% seen in 2024[5].

Time for a Showdown: Comparing the Figures and Targets

Targets: The European Commission envisages a 2025 deficit of 8.6% of GDP on a no-policy-change basis[5]. The government has set a target of 7% of GDP, with a wiggle room of up to 7.5%[1][5].
The Score So Far: The deficit in the first five months of 2025 mirrors the same period last year, yet full-year targets and projections hint at a challenging struggle to keep the deficit under 7.5% of GDP, taking into account the sluggish economic growth and anticipated fiscal consolidation measures[1][3][5].

In summary, Romania grapples with significant fiscal strains as it endeavors to balance deficit reduction with growth strategies. The upcoming fiscal consolidation plan and potential energy cost hikes promise to have a profound impact on both consumption and investment[3][5].

(Photo source: Rochu2008/Dreamstime.com)

[1] Profit.ro[2] Our Website[3] European Commission[4] Romania Insider (membership required)[5] Eurostat

In their attempt to reduce the deficit, Romania's finance department needs to carefully balance deficit reduction strategies with business investment to stimulate economic growth, considering the potential impact of upcoming fiscal consolidation and energy cost hikes.
The budget deficit of Romania reflects a critical aspect of the country's business and finance sector, as the government's target of keeping the deficit under 7.5% of GDP for 2025 presents a challenging task particularly due to sluggish economic growth and anticipated fiscal consolidation measures.