Romania’s new coalition government, led by Prime Minister Marcel Ciolacu, has approved a new economic plan aimed at tackling the country’s escalating government budget deficits for the upcoming 2025 fiscal year. The government has implemented a series of economic ‘ordinance’ measures to address the deficit issues without resorting to austerity or poverty. These temporary changes include raising taxes on corporate dividends, lowering the tax threshold for small companies, capping subsidies, and public sector wages and pensions. Additionally, tax exemptions and incentives for thriving sectors like IT and construction have been eliminated, and a property tax on all corporation-owned buildings has been reintroduced at a lower rate of 1%.
Romania’s Finance Minister Barna Tanczos estimates that these measures could save up to €26.14 billion by the end of the year, with the goal of reducing the country’s current deficit of approximately 8.5% of GDP to 7% by the end of 2025. The government aims to further reduce the deficit to 2.5% over a seven-year period through incremental plans. While these measures have been met with protests in Bucharest, with affected employees expressing concerns about pay cuts, Ciolacu has assured the public that these changes are not a return to the austerity of the 1980s. He has promised that pensions will either be indexed or small pensioners will receive one-off stimulus checks to alleviate financial burdens. Ciolacu also pledged to gradually reduce taxes on low-wage earners and families with children.
Protests have erupted in Bucharest against the new economic measures, with employees from affected fields and prison policemen voicing their opposition to the changes. Protesters have warned the government that financial crises can lead to social upheaval, labeling the new measures as a form of modern slavery. Despite the backlash, Ciolacu remains resolute in his commitment to reform and improve the country’s economic outlook. He has emphasized the need for efficiency in government spending, with plans to establish a government efficiency department aimed at reducing state spending by at least 1% of GDP.
Ciolacu’s government is determined to address Romania’s deficit crisis and improve economic conditions for its citizens. The Prime Minister has stressed that his focus is on efficiency and progress rather than popularity, expressing confidence that the economic plan will benefit the country in the long run. By implementing targeted measures to reduce the deficit and gradually ease the tax burden on low-income earners, the government aims to stabilize the economy and set the stage for sustainable growth. Despite the challenges and protests, Ciolacu remains committed to steering Romania toward a path of development and progress through prudent economic management and reform initiatives.
Overall, Romania’s new economic plan represents a bold step towards addressing the country’s deficit issues and setting a course for economic stability and growth. While the measures have faced criticism and protests, Prime Minister Ciolacu maintains that the changes are necessary for the country’s long-term prosperity. By striking a balance between fiscal responsibility and support for vulnerable groups, the government aims to navigate the challenges of the deficit crisis while laying the foundation for a stronger and more resilient economy in the future.
