Budget spending should not rise, while the fiscal space created by higher revenues should be used for tax cuts, said Adrian Codirlasu, president of CFA Romania.
"The economy is changing as the emerging conflict will alter the outlook. I would say it will do so in two ways. We will have higher inflation. At CFA Romania we estimate it at 6-7%. Higher prices for fuel and natural gas will also be reflected to some extent in electricity prices and will have second-round effects on prices. Moreover, this year as well wages will not keep pace with inflation and purchasing power will continue to decline. The reduction in purchasing power will again put pressure on consumption, which will probably not contribute positively to economic growth. We estimate GDP growth at 0.5% in 2026. Now there is talk of economic recovery. What pushed the economy into a technical recession was the increase in taxes and duties. In my opinion, recovery should have started from here, by trying within a reasonable timeframe to bring taxes and duties back to their initial levels. Additional spending commitments by the government will lead to higher taxes in the future. State budget revenues increased because taxes were raised. Now that additional revenues have come in, spending should not be increased; if fiscal space is created, it should be used for tax cuts," Codirlasu told AGERPRES on Tuesday.
He noted that both in central public administration and at the local level spending remains high and that "the promised reforms have not yet been carried out".
The draft budget for 2026, published on Tuesday by the Finance Ministry, is built on an estimated deficit of 6.2% of GDP, or 127.7 billion lei, which is expected to fall to 5.1% of GDP in 2027.
Gross domestic product is estimated to grow by 1% to 2.045 trillion lei in 2026.
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