The agency anticipates that Romania's fiscal deficit could reach 6.1% of GDP in 2026 if the proposed fiscal-budgetary measures are fully implemented.

Moody's acknowledges the Romanian Government's efforts to reduce the budget deficit, deeming the recently adopted fiscal-budgetary measures "an important step" towards budgetary equilibrium.

The agency's latest report, published on July 9, highlights that the Government's plan is expected to reduce the deficit and slow the growth of public debt more rapidly than previously projected.

The fiscal package, adopted this week, is anticipated to generate a consolidation of approximately 0.6% of GDP for 2025, with a significant contribution from the increase in VAT rates starting August 1.

For 2026, Moody's estimates a budgetary consolidation of around 3% of GDP, resulting from the cumulative effect of measures adopted in 2025 and those to be applied from 2026, such as increased dividend taxes and caps on public sector wage and pension indexation.

The agency underscores that the complete and efficient implementation of these measures and the maintenance of fiscal discipline will be crucial for returning to a sustainable fiscal-budgetary trajectory, given the scale of the planned consolidation.

Minister of Finance, Alexandru Nazare, stated: "We continue to implement the necessary reforms not only to consolidate public finances but to make Romania an increasingly attractive investment destination, offering more opportunities for all."

The improved projections indicate a fiscal deficit of 7.8% of GDP in 2025 and 6.1% of GDP in 2026, a notable improvement from the agency's previous forecasts of 8.3% and 7.7% of GDP, respectively.

Public debt is now projected to peak at approximately 66.5% of GDP starting in 2029, lower than the nearly 71% of GDP forecast in March.