Romania Faces Highest Budget Deficit in the EU, Government Outlines Seven-Year Recovery Plan

Romania has emerged as the European Union member state with the highest budget deficit in 2024, according to the latest data released by the European Commission and Eurostat. The country’s deficit, calculated using the European System of Accounts (ESA) methodology, reached 9.3% of GDP, substantially above the EU average and higher than that of any other member state.

Other EU countries also reported significant deficits, with Poland at 6.6%, France at 5.8%, and Slovakia at 5.3%. In total, twelve EU countries exceeded the 3% of GDP deficit threshold established by EU fiscal rules. In contrast, several countries, including Denmark, Ireland, Cyprus, Greece, Luxembourg, and Portugal, posted budget surpluses.

Despite the concerning deficit, Romania’s public debt remains relatively moderate at 54.8% of GDP. This figure is significantly lower than the debt levels seen in countries such as Greece, Italy, France, Belgium, and Spain, all of which have debt-to-GDP ratios exceeding 100%.

The release of these figures has prompted a swift response from the Romanian government. Prime Minister Marcel Ciolacu announced that Romania has reached an agreement with the European Commission on a seven-year fiscal adjustment plan. This plan is designed to gradually reduce the deficit while allowing the country to continue investing in key economic sectors.

According to the Prime Minister, the European Commission recognised Romania’s need for an extended adjustment period due to the scale of necessary investments and the current economic context. The government’s strategy will focus on two main pillars: boosting investments to stimulate economic growth and implementing measures to reduce public spending.

Ciolacu emphasised that this approach will provide Romania with the fiscal space it needs to modernise its infrastructure, support businesses, and improve public services, while also working towards restoring fiscal discipline. The government is confident that, with the support of the European Commission and a clear roadmap, Romania can bring its deficit back within EU limits without stalling economic development.

This new fiscal plan marks a pivotal moment for Romania, as it seeks to balance the urgent need for economic growth and investment with the responsibility of maintaining sustainable public finances. The coming years will be crucial as the government implements reforms and monitors progress to ensure the country’s long-term economic health and compliance with EU standards.

Despite recent challenges reflected in Romania’s high budget deficit, the country presents a compelling investment opportunity for 2025 and beyond. The government’s commitment to a seven-year fiscal adjustment plan, combined with ongoing reforms and strong EU support, lays a solid foundation for sustainable economic growth and financial stability.

Romania’s strategic location in Southeast Europe, its membership in the European Union, and its expected accession to the OECD this year further enhance its attractiveness by opening access to larger markets and unlocking significant capital inflows. The country benefits from a skilled, multilingual workforce and an improving business environment supported by investor-friendly policies and incentives.