“We built this ordinance around three major goals: halting the increase in government spending, curbing budgetary waste by 1% of GDP or RON19 billion and increasing budget revenue by implementing the structural reforms in the NRRP,” Prime Minister Marcel Ciolacu said.
The high budget deficit, because of RON69 billion or 3.92% of GDP higher spending than initially set in the budget requires urgent steps to avoid severe economic risks, Ciolacu added.
The prime minister dismissed accusations that the ordinance was intended to implement austerity, explaining that the steps were structured to halt government spending, curb budgetary waste and boost budget revenue via structural reforms included in the National Recovery and Resilience Plan.
“Salaries of dignitaries will be frozen again this year and parties will receive 25% less money. Then we continue with the budgetary apparatus. This year, there are no financial resources to increase the salaries of civil servants. There are no more bonuses and additional perks. Every leu paid in salary will be justified by performance criteria and evaluations. Public sector employment will be frozen in 2025. And we will move quickly to disband and merge public institutions and agencies.”
The prime minister defended the decisions the government made this year, citing pension and salary increases, investments in infrastructure, health and energy, subsidies to maintain utility prices and eliminate inequity for retirees. These measures, he said, were essential to “deliver justice for millions and support the economy”.
“So, we are removing all tax breaks and creating a fair tax system. We are gradually lowering the tax threshold on micro-enterprises to avoid a shock in the economy. Around 30,000 SMEs will be affected, 10% of the total, but we will try to support them through other state aid schemes. Also, the introduction of the special construction tax will not be enforced until after the rules have been issued and after discussions of the finance minister. This will keep us in 7th place in the EU in terms of the lowest tax on dividends, ahead of countries like Hungary with 15%, Poland with 19% or the Czech Republic with 23%, while the EU average is 20%.”
Ciolacu warned that the lack of responsible economic measures could lead to a downgrading of the country’s credit rating, chase away investors and increase interest rates on loans, leading to recession, bankruptcies and unemployment. He stressed the importance of maintaining access to European and NRRP funds, which are essential for Romania’s modernization.
(English version by Loredana Fratila-Cristescu)