Romania's Government Implements Budget Reforms and Prepares for Key Appointments in 2026
Romania's government, led by Prime Minister Ilie Bolojan, has enacted budget reforms to address a projected 9.3% GDP deficit in 2024, including raising the VAT and dividend tax rates. Tensions within the ruling coalition have emerged over public administration spending cuts and contentious justice system reforms, while key prosecutor appointments are anticipated this year. Additionally, Romania has secured defense contracts with France, Turkey, and the Netherlands amid the ongoing conflict in Ukraine and aims to attract EUR 15 billion in EU funds for infrastructure projects.
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Romania's government, led by Prime Minister Ilie Bolojan and supported by a coalition of PSD, PNL, USR, and UDMR, has enacted measures to address a budget deficit of 9.3% of GDP in 2024. Key reforms include raising the VAT rate from 19% to 21% and increasing the dividend tax rate from 10% to 16%.
Tensions arose within the coalition over proposed cuts to public administration personnel spending. The justice system reform remains contentious, focusing on magistrates' pensions. A proposed law to increase the retirement age for magistrates was deemed unconstitutional by the Constitutional Court.
Additionally, the mandates of key prosecutors will end this year, with negotiations for their replacements expected. Romania has also signed defense contracts with France, Turkey, and the Netherlands amid the ongoing war in Ukraine. The government aims to attract EUR 15 billion in EU funds this year for various infrastructure projects.
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