Fiscal consolidation measures in Romania show measurable progress

Fiscal consolidation measures in Romania show measurable progress
Fiscal consolidation measures in Romania show measurable progress

Official budget execution data for October indicates the first visible effects of the fiscal consolidation package implemented earlier this year. The figures contradict recent public claims regarding declining revenues or the absence of expenditure control in the public sector.

Key developments

1. Reduction in public sector wage expenditures
Public sector wage spending decreased significantly, reaching approximately 2.72 billion EUR in October, compared with an average of 2.82 billion EUR per month between January and September. This is the first notable monthly decline since 2010.

2. Lower spending on subsidies and social protection
Expenditures for subsidies and certain social programs fell to around 140 million EUR, below the monthly average of 200 million EUR and much lower than last year’s average of 300 million EUR for the same period.

3. Strong growth in VAT revenues
VAT revenues increased to approximately 2.74 billion EUR in October, compared with 1.98 billion EUR last year and an average of 2.1 billion EUR this year. This represents a 38% year-on-year increase, far above the level implied by inflation, consumption trends, and the rate adjustment.

4. Increase in corporate and salary tax revenues
Corporate income tax revenues rose from 6.58 billion EUR (YTD 2024) to 7.64 billion EUR (YTD 2025), an increase of 16%.
Salary tax revenues increased from 8.12 billion EUR to 9.72 billion EUR, up nearly 20%.

Drivers behind the improvement

  • installation of nine high-performance border scanners, more than in the last three decades combined
  • activation of automated risk-analysis tools integrated with e-Invoice and SAF-T
  • leadership changes in key compliance and anti-corruption directorates, with performance indicators introduced
  • strengthened oversight of transfer pricing practices and new limits on certain deductible expenses
  • declining tax evasion related to undeclared work or alternative contracting structures

The October data shows that the fiscal consolidation measures are beginning to stabilize revenues while reducing certain categories of public expenditure. A more detailed analysis will be presented as additional information becomes available.