Romania’s 2025 budget crisis deepens as deficit and debt costs spiral
Romania's financial situation showed significant changes in January 2025. Despite pledges to keep wages steady, payroll expenses jumped nearly 20% year-on-year to RON 14.01 billion. The deficit climbed to 0.58% of the projected GDP, up from 0.45% in January 2024.
Revenue decline was a key factor, with a 1.4% year-on-year decrease to RON 46.75 billion, primarily due to reduced EU funding, which fell to RON 134 million from RON 2.9 billion in January 2024. Meanwhile, expenses increased by 4.5% to RON 57.75 billion, despite a significant drop in capital expenses. Money paid on public debt more than doubled, reaching RON 3.8 billion and accounting for 6.7% of the month's total expenses.
The share of public debt interest also rose to 5.0% of total expenses (2.1% of GDP) in 2024, putting pressure on the budget as public debt increases. Rating agencies, including Fitch, have downgraded their outlook on Romania's sovereign rating, further impacting the budget.
The general government budget deficit in Romania increased by nearly 40% year-on-year to over RON 11 billion (EUR 2.2 billion) in January 2025. The rise in payroll expenses, despite pledges to freeze wages, and the decline in revenues, coupled with increased interest payments, have contributed to this significant increase in the deficit.
