Warnings over Unchecked Deficit in Romania from Ex-Presidents and Prime Ministers Since Summer 2024
Romania's top officials, including former President Klaus Iohannis, former Prime Minister Marcel Ciolacu, and former Senate President Nicolae Ciuca, were warned about the potential risk of default and a growing budget deficit in 2024. This warning came in the form of six confidential documents, which were sent between August and December of the same year [1].
The documents, signed by finance minister Marcel Boloş and other high-ranking officials, highlighted the imminent risk that Romania would exceed its assumed deficit target for the year, potentially leading to default. The warnings stressed that without urgent budgetary measures to limit expenditures, the deficit would worsen, increasing the cost of financing the budget deficit [1].
The budget deficit indeed reached 9.3% of GDP in 2024, the highest in the European Union, causing severe concerns from the EU and financial bodies. The ECOFIN council issued warnings demanding immediate corrective actions [1][4].
To prevent default and bring the deficit under control, the Romanian government recommended and implemented several austerity and fiscal consolidation measures. These included increasing Value Added Tax (VAT), higher excise duties, increased dividend taxes, freezing public sector wages and pensions through 2026, and implementing spending caps across the public sector [2][4].
These measures aim to reduce the deficit below 6% of GDP by the following year to avoid credit rating downgrades and EU sanctions [2][4]. The government presented these fiscal reform plans to EU institutions, which allowed Romania to avoid immediate penalties and continue receiving EU funds. The EU gave a postponement until autumn 2025 for Romania to prove effective deficit correction with the goal of reducing the deficit to no more than 3% of GDP by 2030 [3][5].
The last document sent to Iohannis, Ciolacu, and Ciuca previewed measures needed to prevent default, including urgent actions regarding public sector salaries, bonuses, and holiday vouchers [1]. Romania is expected to end 2024 with a budget deficit of nearly RON 153 billion [6].
In a related development, Vlad Gheorghe, leader of the extra-parliamentary opposition party DREPT, filed a criminal complaint against former prime minister Marcel Ciolacu for alleged lies about the state of the economy and budget deficit [7]. Allegations have been made that Ciolacu used public funds to increase his and the Social Democratic Party's scores during the 2024 local, European, parliamentary, and presidential elections [8].
Former finance minister Marcel Boloş confirmed the existence of the documents and stated that they were sent to the Presidency, the Government, and the Senate under confidential status to avoid a crisis of confidence in Romania's ability to pay its debts [1].
Sources: [1] Europa Libera Romania [2] Reuters [3] European Commission [4] European Stability Mechanism [5] European Central Bank [6] Agerpres [7] Ziare.com [8] Hotnews.ro
The confidential documents, signed by finance minister Marcel Boloş and other high-ranking officials, underscored the connection between Romania's politics and business, as they warned top officials about the impending financial crisis due to a growing budget deficit in 2024. The economic concerns extended to general-news, with the EU and financial bodies expressing worries about Romania exceeding its deficit target, leading to potential default.
