Romania is paying a very high price to stabilize itself from a financial and economic point of view after the political crisis that appeared a year ago in the elections and especially after the budget slippage in 2024, but also from previous years. The economy is impacted by the increase in inflation as a result of the increase in taxes, the increase in interest in lei and because of inflation, but also because of the need for financing the state, the increase in the leu/euro exchange rate, the decrease in purchasing power that led to the decrease in consumption, the decrease in private investments, the economic downturn, the reduction in employment and salary increases, the increase in public debt and external debt. After almost nine months of financial tensions, Mugur Isărescu, the governor of the National Bank of Romania, says that a balance has now been reached, and investors are financing Romania again, but everything can be lost if the budget adjustment program is interrupted. The economy is struggling to recover from two years of decline, and the third quarter result – up 1.6% from Q3/2024, up 0.8% at nine months from 0.3% at six months – brings some hope. But more signs and data are needed to confirm the trend. Romania needs an economic growth of over 3% per year, not 0% or 1%. The problem is that the economy cannot recover faster as long as inflation is high, close to 10%, which keeps interest rates high. Only from the middle of next year we could see the reduction of inflation, if we don't wake up with unforeseen events on the way. The National Bank will not reduce interest rates until the middle of next year, i.e. until it sees the drop in inflation below the reference interest rate of 6.5%, and especially until it sees a significant reduction of the budget deficit, as promised, of more than 2% of GDP, which would also require a significant decrease in the government's financing needs, i.e. 50 billion lei, the equivalent of 10 billion euros, which is not a small amount. The government is the biggest «buyer» of money in the market and the interest rates it offers, of over 7% to lei per year, influence the level of other interest rates in the market. On Friday, Prime Minister Bolojan presented more data regarding the budget situation in the third quarter, when «the result of the increase in VAT and other taxes» should start to be seen. The problem is that this budget execution, presented as a budget reform, comes from the increase in taxes because on the expenditure side, apart from the freezing of salaries and pensions, nothing else significant can be seen. There is no reform of local administration, no agency is cut, no budget is cut, salaries are not cut (if any salary is reduced, PSD threatens to leave the government). The political battle to reduce budget spending appears to be lost before it even begins. Although it is in government, PSD has an opposition party rhetoric, PNL is more of a party that relies on budgetary support than on liberal support from the economy, and USR and UDMR have their own rhetoric. The seen and unseen dispute between the PSD and Prime Minister Bolojan on the topic of budgetary restructuring measures, we don't even know which package of measures has been approved and what not, maintains tension and political instability. The financial markets, those that lend to Romania, watch every day the verbal disputes between the prime minister and the PSD and keep Romania in the red zone. After Romania's finances stabilized, but at an extremely expensive level – through the high interest rates that the government pays to borrow, through the increase in the exchange rate -, the PSD, which together with the PNL created the budget disaster, returned to the foreground, as if they were not responsible for what they left behind. On the other hand, the problem of Prime Minister Bolojan is that he positioned himself as a character who raised taxes and who now wants to cut salaries and the number of people in the budget sector, and in this way the topic of economic relaunch is lost, it does not even exist in the discussion. All the private sector, all the companies, all the investors, all the multinationals are waiting for a positive message, they are waiting for economic recovery measures, they are waiting for the change in the rhetoric and the feeling in the market in order to relaunch the investments. Without putting an economic recovery plan on the table, without discussing measures to increase investments and not increase taxes, it will be difficult for things to move again. In 2005, Băsescu and Tăriceanu cut taxes and introduced the single rate of 16%, in 2016 Dragnea came to power with an economic relaunch program, but now this is missing from the discussions. And during this time the economy revolves around an economic growth of 0%, although the market is full of money, although companies, banks, investors, even individuals, have important financial resources, to do something with them, to invest them. Romania's financiers, who have shown all their goodwill and desire to continue financing the economy and the government, ask the leaders in Bucharest for one thing – political stability. If it does not exist, a decade of economic growth will be erased overnight. If we enter 2026 still with restructuring plans but without economic recovery plans, without changing the rhetoric, the feeling and the trust, we will find that we will have another year with zero economic growth, but with an increasingly bad feeling towards the government, towards the coalition, towards the parties, towards the current political leaders, and everything will come together in the electoral options, and Romania will not only be faced with a bullet, but in the face of a firing squad.
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