The state budget law seems to have become almost optional, spending on salaries and pensions absorbs a large part of budget revenues, investments in infrastructure and modernization remain at a modest level and the trade deficit shows that Romania consumes more than it produces, without a clear reindustrialization strategy, says Cristina Chiriac, president and founder of the National Confederation for Women’s Entrepreneurship (CONAF).

“One of the biggest alarm signals of the Romanian economy is the fact that the state budget law seems to have become almost optional. We started last year, with a forecast deficit of 5% of GDP, we corrected it to 6.9%, and in the end we reached 8.6% on cash, a fact that attracted the attention of rating agencies and financial markets, which began to view Romania with a high degree of skepticism. These slippages are more than simple adjustments – they undermine the confidence of investors, rating agencies and the business environment. For the state budget to be a real development tool, not just a list of expenses and loans, it is necessary: ​​prioritizing investments over consumption, disciplined budget execution, not rectifications that destabilize public finances, reducing dependence on foreign loans, by increasing domestic revenues (…) If we look at the structure of Romania’s budget, we clearly see the problem: spending on salaries and pensions absorbs a large part of budget revenues, investments in infrastructure and modernization remain at a modest level, the trade deficit shows that Romania consumes more than it produces, without a clear reindustrialization strategy,” argues Cristina Chiriac, in a recent analysis.

In the vision of the head of CONAF, countries that attract industrial investments offer fiscal incentives, not additional taxes, and offers as examples Poland, Hungary and the Czech Republic, which have managed to create an attractive environment for investors. “The fiscal adjustments necessary to reduce the deficit will be difficult and must be made without seriously affecting economic growth,” she says.

“If Romania does not change its fiscal approach, we risk entering a vicious circle in which the state borrows more and more expensively, and the private economy is suffocated by unpredictable taxes. We must put an end to this model and fulfill our obligations assumed whether we are talking about: the state budget law, the PNRR or the fiscal adjustment program agreed with the European Union (until 2031), and understand the challenges of their implementation. The government estimates in 2025 regarding economic growth of 2.5% seem optimistic only at a simple analysis, considering that last year 3.4% was estimated and only 1% was achieved. The target of maintaining the budget deficit at 7% seems a major challenge, considering that we are still borrowing a lot and expensively even though we could access European funds or access the billions available from the PNRR. No matter how good the Government’s intentions may be, the key to success will be determined by: the resilience of the economic and social environment, the impact on economic growth (reducing the deficit through tax increases and spending cuts could slow down the economy, which would affect budget revenues and make adjustment more difficult) and, most importantly, the credibility of the government,” Chiriac adds.

According to the cited source, one of Romania’s greatest opportunities “still is” the National Recovery and Resilience Plan (PNRR). Cristina Chiriac warns, however, that the risk of not fully accessing the allocated funds is real and must be treated seriously.

“We have significant European funds at our disposal, but with one essential condition: to carry out the promised reforms. This is where the concept of corporate governance comes in, a model that can bring more transparency and efficiency in the use of public money. However, Romania faces major difficulties in implementing the reforms in the PNRR, including in essential areas such as the digitalization of the administration and the pension reform. The risk of not fully accessing the allocated funds is real and must be treated seriously. The PNRR is an important test: can we show that we know how to govern responsibly or can we lose this opportunity, which would leave us only with the option of new loans. The second option is not sustainable,” stresses the CONAF representative.