Romania’s budget deficit narrows sharply to 1.17% of GDP in the first four months of 2026, down from 2.92% in the same period last year, the Finance Ministry reports. The €6.5 billion correction—equivalent to 32.4 billion lei—marks the steepest fiscal adjustment in recent years, Finance Minister Alexandru Nazare said, crediting strict expenditure controls and a surge in EU fund absorption without cutting public investment.
The improvement sends “a strong credibility signal to investors and rating agencies,” Nazare added, as the government races to meet its 2026 deficit target of 4.4% of GDP. Revenue growth outpaced spending, with tax receipts rising 12.3% year-on-year, driven by higher VAT and excise collections, while primary expenditures grew only 3.8%, according to ministry data .
EU funds played a pivotal role: disbursements reached €2.1 billion in the first quarter, up 42% from 2025, as Romania accelerated projects under the 2021–2027 budget cycle. Nazare warned that “no accidents” in absorption can be tolerated, given the deficit’s sensitivity to external shocks like energy prices and ECB policy . The European Central Bank’s potential June rate hike—cited as “necessary” by officials amid inflationary pressures—could tighten financing conditions, complicating Romania’s debt rollover plans .
The deficit reduction comes as Romania prepares to transition public-sector salaries to a new grid in 2027, with teachers and doctors slated for base-pay increases. While the wage reform aims to reduce disparities, its €1.2 billion annual cost could strain the 2027 budget if revenue growth slows. Nazare has not ruled out further tax adjustments, though no measures have been announced.