The Ministry of Finance has made transparent the national budget structural plan for the medium term – 2025-2031, which stipulates the provision of a trajectory for the adjustment of the budget deficit for a period of 7 years, having as a starting point an estimated budget deficit of 7.9% for the year 2024 and as end point the year 2031, with a budget deficit of 2.5% of GDP.
The plan presented in Brussels on Friday must be approved by the European Commission before it can be implemented.
The 10 reforms and the contribution of each to reducing budget deficit
The government plan contains 10 types of reform:
Reform 1: Tax reform
necessary for the fiscal-budgetary adjustment and concerns changes made to the tax system according to milestones 207, 208 and 237, estimated to have a budgetary impact of at least 1.1% of GDP for the year 2025 regardless of the impact of the increase in the non-taxable ceiling for pension income, a reform that contributes significantly to fiscal adjustment;
Reform 2: Reform of taxation of micro-enterprises
is based on milestone 206 of the NPRR and includes changes that have already been largely implemented through payment request no. 3 submitted in the NPRR, the remaining measures being scheduled for implementation depending on the decisions that will be approved by the Romanian Government. Estimated budget impact: 0.1% of GDP. It ensures measures to fight tax evasion, improve collection, reduce the tax gap, as well as to modernize Romania’s tax system;
Reform 3: Tax Administration reform
digitization, reducing the tax gap, improving the collection of taxes and updating the legal framework concerning insolvency. Estimated budget impact: 0.5% of GDP;
Reform 4: Reform of the state/local economic operators’ expenditure system
streamlining the operational expenses system, improving the administration of public patrimony and natural resources, introducing spending norms, monitoring the public investment system, reducing dependence on the consolidated general budget. Estimated budget impact of: 0.25% of GDP;
Reform 5: Restructuring the public expenditure system
the introduction of expenditure norms, the systematic analysis of public expenditure, the expansion of the centralized procurement system, the digitization of the public expenditure system. Estimated budget impact of: 0.35% of GDP;
Reform 6: Minimum wage reform
The entry into force of the document regulating the new system for establishing minimum wage. Budgetary impact: +0.11% of GDP;
Reform 7: Public sector wage system reform
Carrying out a global assessment of the impact of the Law on the remuneration of staff paid from public funds, including an assessment of the fiscal impact of the new law; the adoption and enforcement of the new legal framework regarding the remuneration of civil servants. It ensures the reduction of the share of personnel expenses by approximately 1% of GDP over the 2025-2031 forecast period;
Reform 8: Pension reform
Improving the legal framework to ensure the sustainability of the Pillar II of pensions, increasing contribution from 4.75% to 6% by 2031. Reforming the pension system based on the principle of contribution. Budgetary impact 2025: -1.1% of GDP – 2025, -0.8% of GDP – 2026. Over the forecast period, it ensures a reduction of this category’s share in GDP by -1.8% of GDP;
Reform 9: Special pensions reform
Reduction of special pensions expenditure. Budget impact 2025: -0.02% of GDP, 2026: -0.03% of GDP;
Reform 10: Reforming the business financing system. Attracting investors
Attracting investors: support for large investments in the economy, the establishment of the Investment Fund to support the business environment, the regulation of loans for investments and grants allocated for the support of the manufacturing industry;
- I1: Investments in irrigation infrastructure to fight climate change: ensures capitalization of Romania’s agricultural potential and, together with investments in the agro-food industry, ensure the reduction of Romania’s trade balance deficit. Budget impact – 0.11% of GDP/year;
I2: Investments in the manufacturing industry: ensures the allocation of national funds through national programs for the manufacturing industry as a foundation for Romania’s long-term economic development. Budget impact -0.12% of GDP/year;
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