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Romania's entry with land borders into the Schengen area, one of the most important diplomatic achievements of the beginning of the year, was quickly overshadowed by a series of events that strained the country's political, social and economic scene. In the foreground was the disappearance in January of part of the Dacian treasure, including the famous golden helmet from Coţofeneşti and three Dacian bracelets, stolen from the Drents Museum in the Netherlands on the very last day of the exhibition. The incident, facilitated by the lack of security, sparked a wave of accusations, international investigations and led to the dismissal of the director of the National Museum of History of Romania.
But beyond this dramatic episode, preliminary data on budget execution further deepen concerns about the direction of the Romanian economy. According to media outlets citing sources from the Ministry of Finance, Romania's budget deficit after the first three months of 2025 reached 44 billion lei, or 2.3% of GDP. This level is already above that recorded in the same period last year, when the deficit was 2.06% of GDP. The upward trend in the budget deficit intensified in March, when another 13.7 billion lei, equivalent to 0.7% of GDP, was added to the deficit accumulated in January and February. Although the Ministry of Finance has not yet published official data for March, they are expected in the coming days.
The increase in the budget deficit and the political instability of the recent period have significantly contributed to the deterioration of the perception of country risk. All three major rating agencies - Moody's, Fitch Ratings and S&P Global Ratings - have placed Romania under a negative outlook, signaling the possibility of a downgrade of the sovereign rating to the "junk" category. Moody's confirmed the rating at "Baa3", but revised the outlook to "negative" in March 2025, citing the risks generated by the high fiscal deficit and the tense political climate. Fitch Ratings and S&P Global Ratings had already adopted a "negative" outlook since the first months of the year, both warning that Romania remains just one step away from losing its investment grade status. S&P Global Ratings maintained the rating at "BBB-", but stressed that any significant overshooting of the deficit and public debt estimates could lead to Romania's effective downgrade to the "junk" category.
Although Parliament adopted in February the state budget law based on the Government's economic growth forecast of 2.5% and a deficit target of 7% of GDP for the end of the year, the first three months suggest a worrying dynamic. The Executive's expansive spending policies, largely driven by ambitious public investments and social measures - such as the extension of the energy price cap and support for farmers and pensioners - are being hampered by insufficient revenues collected in the budget. This reality has already forced the Government to increase the Medium Term Notes issuance program from 75 billion euros to 90 billion euros since January, in order to cover the financing needs for 2025 and 2026.
In this macroeconomic and financial context, the National Bank of Romania decided to maintain the monetary policy interest rate at 6.5% per year throughout this period, to maintain the interest rate for the lending facility (Lombard) at 7.5% per year and the interest rate for the deposit facility at 5.5% per year.
The fragile economic context was also amplified by political instability. Although the motion of censure filed by the opposition at the end of February failed, and the Ciolacu Government survived the vote in Parliament, the period was marked by the resignation of President Klaus Iohannis, who was under pressure from an imminent suspension from office. The interim takeover of the presidential office by Ilie Bolojan has failed to calm spirits, especially in the context of corruption scandals in the Port of Constanta and criminal cases targeting important political actors and networks of online influencers.
All these elements outline a tense start to the year, in which Romania, despite benefiting from important diplomatic successes, seems to be sinking more and more into budgetary imbalances and political instability.
• January, under the sign of debts: The Romanian state increases the loan ceiling to 90 billion euros
In the first month of 2025, Romania was faced with an acute need for financing, strongly felt since the beginning of the year, in the context of major government decisions related to infrastructure investments and public debt management. The government approved in the first month of the year the financing of a series of important projects, including the completion of the Răstoliţa hydropower development, a 200 million euro investment by Hidroelectrica that received the environmental consent at the end of the previous year, as well as the construction of the Brăila-Galaţi bypass section of the Buzău-Brăila-Galaţi expressway, with a budget of 812 million lei. Other significant projects include the modernization of the roads between Galaţi and Hanu Conachi, with EU funding of 1.85 billion lei, the rehabilitation of 40 kilometers of road and 12 bridges, as well as the construction of the Pantelimon road junction, part of the Bucharest Ring Road, with a budget of 175 million lei. In addition to these investments, the authorities allocated 5.6 million lei for compensation for the expropriations necessary in Răstoliţa, underlining the importance of this project in Romania's energy strategy. On the social front, the Government continued to finance the "Hot Meal" program, which benefits over 500,000 children from 1,462 educational institutions, demonstrating its concern for supporting vulnerable categories.
However, the pressure on public finances led the Executive to modify, as early as January 10, the ceiling of the "Medium Term Notes" (MTN) government bond issuance framework program, increasing it from 75 to 90 billion euros. This decision aims to cover the financing needs for the years 2025 and 2026 and to carry out early refinancing operations. Eurobond issuances of approximately 13 billion euros are thus estimated in 2025, in the context of bonds worth 2 billion euros reaching maturity during the year.
In parallel, the Ministry of Finance launched, on January 13, a new issue of Treasury government bonds, offering maturities of 1, 3 and 5 years, with attractive annual interest rates, between 7% and 7.8%. These measures come against the backdrop of a budget deficit of 11 billion lei at the end of January, representing 0.58% of GDP, up from the same period of the previous year.
The decrease in budget revenues, by 1.4% compared to January 2024, was mainly determined by the reduction in VAT and European funds, partially offset by the increase in the tax on salaries and incomes. Public spending increased by 4.5%, driven by the increase in personnel expenses (+18.6%), social assistance expenses (+12.8%) and medication reimbursements (+18.7%). In contrast, investments from foreign and domestic funds were significantly reduced, by almost 45% and 28% respectively, compared to January 2024.
In this tense macro-financial context, the National Bank of Romania decided, on January 15, to maintain the monetary policy interest rate at 6.5%, amid inflation that, in December 2024, had reached 5.14%, above previous expectations. The main factors of inflation were the increase in fuel, food and raw material prices, accentuated by fluctuations in the US dollar and the effects of the severe drought in the summer of the previous year.
At the European level, Romania received, on January 21, the approval of the ECOFIN Council for the medium-term budgetary-structural recovery plan, which involves the gradual reduction of the deficit below the 3% of GDP threshold by 2031. The plan provides for annual limits on the increase in public spending, contributing to maintaining financial sustainability and continuing investments. The government integrated these measures into the draft budget for 2025, approved on February 1, estimating economic growth of 2.5%, a GDP of 1,912.6 billion lei and inflation decreasing to 3.8% at the end of the year.
Investments are expected to reach a record level of 150.5 billion lei in 2025, respectively 7.9% of GDP, reflecting the continuation of major infrastructure projects, including with the support of European funds and the National Recovery and Resilience Plan.
In another register, January 2025 was marked by a serious incident on the international stage of cultural heritage: the robbery of the Drents Museum in the Netherlands, where the golden helmet from Coţofeneşti and three Dacian bracelets were stolen following an explosives attack. The incident, considered a major security failure, has sparked harsh reactions from Romanian authorities, including high-level discussions between President Klaus Iohannis and Dutch Prime Minister Dick Schoof. Following the event, the director of the National History Museum was dismissed, and the Bucharest government decided to collaborate with the authorities in OIanda and with companies specializing in the recovery of stolen art objects.
• February, the month of important decisions: Iohannis' resignation and the approval of the state budget
The government approved, on the first day of February, the draft budget for 2025, based on an economic growth of 2.5%, a GDP estimated at 1,912.6 billion lei and an average annual inflation of 4.4%. These indicators reflect a moderate macroeconomic optimistic rate scenario, despite the global context marked by economic slowdown. The projection regarding the reduction of the budget deficit from 8.6% of GDP at the end of 2024 to 7% at the end of 2025 underlines the authorities' intention to continue the fiscal consolidation process, even if this strategy may imply limitations on public investments and expanded social programs.
As for budget revenues and expenditures, they are estimated at 667.5 billion lei and 802.2 billion lei, respectively, which outlines a significant but manageable deficit. Personnel expenses amount to 169.5 billion lei (8.9% of GDP), and social assistance expenses to 242.3 billion lei, both representing constant pressures on public resources. The announced public investments are expected to reach a record level of 150.5 billion lei, which shows a clear orientation towards development, but their efficiency depends on the degree of budget execution and the absorption capacity of the available funds, especially in the context of rigid expenditures that limit the flexibility of the government's response in crisis situations.
The 2025 budget provides for consistent allocations for local authorities, targeting allowances for people with disabilities, child protection, pre-university and denominational education, as well as local road infrastructure. These allocations support territorial balancing and decentralization of public services, but vulnerabilities persist in terms of the criteria for distributing funds, the unequal administrative capacity of administrative-territorial units and the efficiency of audit mechanisms.
The package of fiscal measures adopted by the Government in February included updating the minimum wage according to inflation and productivity, liberalizing cross-border credit services and allocating funds for the green transition. These measures are intended to support domestic consumption and fulfill commitments made to the European Union, although, in the short term, they may generate additional pressure on the business environment.
The state and social security budgets were adopted by Parliament on February 5, with 254 votes in favor and 192 against, after approximately 60 amendments were made in the specialized committees, most of which aimed at additional allocations, including for the State Secretariat for Religious Affairs.
Regarding the energy market, the Government decided to postpone the reliberalization scheduled for April 1, 2025, extending the cap on electricity prices until July 1, 2025 and on natural gas until March 31, 2026. This measure aims to protect household and non-household consumers, especially vulnerable ones, from energy price increases. Suppliers are required to ensure minimum stocks of natural gas, and price differences will be covered from the budgets of the Ministry of Labor and the Ministry of Energy, including the Energy Transition Fund and the state budget.
In order to support budgetary expenditures and maintain the capping-compensation scheme, the Ministry of Finance continues to contract loans on the domestic market. The TEZAUR program reached a record of 5 billion lei in the first edition of this year, and the FIDELIS program attracted 4.3 billion lei.
Against the background of these developments, the National Bank of Romania decided, in its meeting of February 14, to maintain the monetary policy interest rate at 6.5% per year, given a decrease in the adjusted CORE2 inflation rate and some corrections on the government securities market. The BNR estimated in February a further decline in inflation to 3.8% in December 2025 and 3.1% at the end of 2026.
On the political front, the second month of 2025 brought a major change at the top of the state. President Klaus Iohannis resigned on February 12, after more than a decade at the helm of the country, in the context of an imminent suspension from office initiated by the opposition and supported by members of the governing coalition. His decision averted a deep political crisis and facilitated the institutional transition, with presidential duties temporarily returning to the President of the Senate, Ilie Bolojan.
On the political scene, tensions intensified with the indictment of Călin Georgescu, a former candidate for the presidency of Romania, accused of inciting actions against the constitutional order and other serious crimes, including promoting fascist ideologies and anti-Semitism. The case handled by the General Prosecutor's Office targets 21 people, and the investigations have revealed a series of dangerous links with paramilitary organizations and controversial financiers. Also in February, the National Anticorruption Directorate launched a large-scale investigation into corruption in the Port of Constanta, targeting directors, officials and businessmen involved in the preferential award of public contracts. The amounts involved in the case exceed 6 million euros, and the case again raises highlighting systemic corruption in Romania's strategic infrastructure and the urgent need for reforms in the field of public procurement.
• March, the month of high stakes: energy, agriculture, strategic investments and the explosion of electoral tensions
The first quarter of 2025 ended with a March marked by important strategic decisions, in a delicate balance between social support, economic investments, programs dedicated to industry and entrepreneurship, but also fiscal prudence measures. The Government has relied on a combination of policies aimed at supporting both economic development and the protection of vulnerable categories, in a complex macroeconomic context, influenced by external tensions and internal adjustments. The essential challenge remains maintaining the balance between investments, fiscal sustainability and social support.
In terms of energy, Romania is increasingly shaping its profile as a regional actor, with the Government's recent decisions balancing domestic needs with European and international commitments. Prime Minister Marcel Ciolacu, paraphrasing Donald Trump, sent the now-famous message to Energy Minister Sebastian Burduja: "Drill, Sebi! Drill!", unequivocally supporting the country's energy development strategy.
Thus, March brought the allocation of 1.2 billion lei for 18 projects to develop natural gas distribution networks, with funds coming from the sale of carbon emission certificates. The projects aim to expand infrastructure in disadvantaged local communities, an important step towards democratizing access to energy. At the same time, the Executive approved the granting of state aid of up to 3.12 billion lei for the Energy Complex "Valea Jiului" S.A., intended for the implementation of the phased closure plan of mining operations by the end of 2032. This measure includes grants for the safety of underground activity, the rehabilitation of mining perimeters, soil reclamation and support for the professional retraining of employees who will lose their jobs.
Furthermore, the Government has established a state aid scheme for large industrial energy consumers, in order to maintain their competitiveness, in the context of policies to reduce greenhouse gas emissions. The budget of the scheme amounts to 578.4 million euros until the end of 2031, with annual allocations of maximum 150 million euros. This provides for partial exemption from the payment of green certificate purchase obligations for approximately 200 large companies in energy-intensive sectors.
At the same time, as Romgaz and OMV began drilling in the Neptun Deep area, several environmental NGOs, including Greenpeace Romania, sued the Ministry of Energy and Minister Burduja, challenging the project. Prime Minister Ciolacu reacted promptly, defending his minister and accusing these organizations and opposition parties of serving Russian interests, trying to sabotage Romania's chances of becoming one of the main natural gas producers in the European Union. In addition to the energy sector measures, the Government approved in March the allocation of over 1.5 billion lei to support farmers and livestock breeders: 600 million lei for breeders' applications in 2023, 400 million lei for farmers and 450 million lei for a new aid scheme for livestock. The launch of the new edition of the Start-Up Nation program, financed with 440 million euros from European funds, was also announced, with the objective of creating over 15,000 jobs and supporting 7,500 entrepreneurs.
To protect consumers and companies, the Executive decided to extend the cap on RCA policies until June 30, 2025, in an attempt to prevent market imbalances and the explosive increase in prices. The decision comes against the backdrop of a national car park of over 10.7 million vehicles, of which only 7.6 million are insured.
On the economic front, Romania has obtained 615 million euros in European funding for three major projects for the extraction of critical minerals - graphite, magnesium and copper - essential resources for the automotive, defense, aeronautics and energy transition industries. These projects, carried out at Salrom SA and in Hunedoara County, have the potential to significantly reduce Romania's and the EU's dependence on imports from outside the EU.
Regarding the fiscal situation, in order to cover the increased budget deficit, the Ministry of Finance once again resorted to loans through the Fidelis and Tezaur programs, attracting over 4.3 billion lei.
In parallel, the Supreme Council of National Defense approved the phased increase in the defense budget, the acquisition of a multirole corvette for the Naval Forces and the intensification of support for Ukraine, amid the prolonged conflict in the region.
The first month of spring was also tense from an electoral point of view. Călin Georgescu and and Diana Şoşoacă's candidacies in the presidential elections of May 4 were rejected by the Central Electoral Bureau, a rejection also confirmed by the Constitutional Court of Romania, citing the failure to meet fundamental constitutional conditions and incompatibility with democratic values, membership in NATO and the EU. These decisions sparked violent protests, especially from Georgescu's supporters, culminating in criminal investigations for incitement, violence and illegal possession of weapons.
On the same note, prosecutors expanded the investigations related to the illegal financing of Georgescu's campaign, detaining Bogdan Peşchir, accused of distributing significant amounts of money through TikTok and Revolut to influence the electorate.
Amidst these tensions, DIICOT also dismantled the "Vlad Ţepeş" group, accused of treason and plans to destabilize the constitutional order, a group with alleged links to foreign agents, including from the Russian Federation.
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