Romania: Election of Centrist Candidate Supports Structural Reforms Momentum Thought Fiscal Pressures Remain

Source: Eurostat, Scope Rathings The Second Round of the Presidential Election Occurred Against the Backdrop of Growing Concerns Over the Fiscal Position. The Fiscal Deficit Widened to 8.6% of GDP in 2024, The Highest in the EU (Figure 1). Credible and Ambitious Fiscal Consolidation Is Essential to Reversing this Deterioration and Meeting the Targets Set Out in the Medium-Term Fiscal Plan Failure to Deliver On these Commitments Could Jeopardise Access to eu Funding and Weaken the Country’s Growth and Fiscal Outlooks.

Election Outcome to Influence Medium-Term Economic and Fiscal Outlooks While The Romanian Presidency have Limited Formal Authority Over Economic Policy Making, The Election Outcome Will Nonetheless Influness Medium-Term MacroeConomic and Fiscal Traject. The Defeat of the Governing Coalition’s Candidate, Ion AntonesCu, in the First Round Trigger of the Collaps of the Government Earlier this MONTH. Coalition Negotias Are Now Expert to Begin Among The Main Pro-Eu Parties, Along with Representatives of Hungarian Ethnic Minority Groups.

The Focus Now Shifts to Two Main Issues. FIRST, THE SPEED OF COALITION FORMATION, AS PROLONGED NEGOTIIATIIMS CRITICAL FISCAL AND STRUCTURAL REFORMS Challeged by a Fragmented Parliament and the Diffechulty of Building Consensus.

Romania’s Medium-Term Fiscal Plan, Endorsed by the Europe Commission Last Autumn, Targets A Reduction in the Fiscal Deficit to 7% of GDP in 2025. However, Scope Has Flagged Driven by Weaker-Qan-Expected Economic Growth and Low Eu Fund Absorption. Despite Consolidation Measures introduced this year, Continued Fiscal Slippage Is a Key Risk, with The Budget deficit Reaching 2.3% of gdp in q1 2025, abut 0.3 percent. Period Last Year.

WHILE The Presidential Election Outcome Offers Near-Term Relief, The Fundamental Challenge of Forming a Stable Parliamentary Majority Willing and Able to Immplement A Fight-Flands be addressed.