Finance
EU approves Romania's seven-year deficit reduction plan
Published by Global Banking and Finance Review
Posted on January 21, 2025
2 min readLast updated: January 27, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on January 21, 2025
2 min readLast updated: January 27, 2026
EU finance ministers approve Romania's plan to cut its fiscal deficit below 3% by 2030, aiming to stabilize public debt and reassure investors.
BUCHAREST (Reuters) - EU finance ministers approved Romania's deficit-cutting plan on Tuesday to bring its fiscal deficit below 3% of national output by 2030, a move Bucharest hopes will help reassure investors about its economic outlook and tame surging bond yields.
Romania has been under the EU's excessive deficit procedure since 2020, meaning it must present the European Commission with a multi-year plan to reduce the deficit back to below the bloc's ceiling of 3% of gross domestic product (GDP).
Bucharest submitted its seven-year deficit reduction plan to Brussels last October, saying it aimed to lower the fiscal shortfall from 7.0% in 2025 to 2.5% in 2031.
Finance Minister Barna Tanczos told Reuters this month the new coalition government was sticking to that plan.
The government said its 2025 budget plan will cut the deficit to 7% of economic output without hiking any major tax while keeping state investment high, despite analyst warnings that more measures are needed.
Fitch has cut Romania's credit rating outlook to negative and all three main ratings agencies have the country on their lowest investment-grade. Romania's 10-year yield has surged to 8.1% earlier this month, a two-year high.
"Romania's fiscal plan aims to stabilise public debt at a time (when) ... Romania continues to rank among the first in the EU for public investment levels," Tanczos said on Tuesday.
Fiscal consolidation is key to ensuring Romania continues to receive billions of EU recovery and development funds - over 70 billion euros by 2027 - which are underpinning infrastructure investment and economic growth.
Romania's budget deficit for 2024 is expected to hit 8.6% of economic output after heavy spending ahead of parliamentary and presidential elections late last year.
In a further test of investors' confidence, Romania was plunged into political turmoil when a far-right NATO critic won the first round of the presidential election on Nov. 24, prompting accusations of Russian interference - denied by Moscow - and ultimately leading to the annulment of the entire ballot.
(Reporting by Luiza Ilie and Gergely Szakacs; Editing by Gareth Jones)
The main topic is Romania's seven-year plan to reduce its fiscal deficit to below 3% of GDP by 2030, approved by EU finance ministers.
It aims to stabilize public debt, reassure investors, and ensure continued access to EU recovery funds.
Romania faces high bond yields, a negative credit rating outlook, and political instability affecting investor confidence.
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