Daianu: It is not the growth model that is to blame for the imbalances, but rather macroeconomic policy errors and the quality of institutions

Romania’s macroeconomic imbalances are caused by errors in macroeconomic policies and weaknesses of the institutions, not by the growth model and accession to the euro zone is not possible as long as Romania has big deficits, states the chairman of the Fiscal Council, Daniel Daianu in an opinion material.The economist explained, in the context, that the macro imbalances of Romania are the result of macroeconomic policy errors, reckless fiscal-budgetary policies which let to excessive budgetary deficits.He argues that it is not a flawed economic growth model that primarily explains the large budget deficits of the past decade (over 9% of GDP in 2024, when GDP growth was below 1%), but rather expansionary policies and a failure to address the urgent need to increase tax revenues by combating tax evasion and tax avoidance — tax revenues, including social security contributions, amounting to 27–28% of GDP, compared to the EU average of 40%.According to the economist, it is difficult to believe that Romania could become ‘ a Norway of the Black Sea’ (by the exploitation of oil and gas) and generate substantial revenue from this operation to fund the public budget.‘These resources may help us during the period of transition, as Romania has to go on with the gradual phase-out of fossil fuels’ he considers.On the other hand, demographic issues and population aging represent a major challenge affecting all EU member states. “Romania’s economic future is linked to that of the EU; a different model of economic growth depends on public policies at the national and EU levels, as well as on public and private investment,” said the chairman of the Fiscal Council. According to analyses by the Fiscal Council, if fiscal consolidation were not to continue beyond 2026, public debt would remain on an unsustainable trajectory, exceeding 80% of GDP in 2034. The upward trajectory of public debt is also reflected in the deterioration of the gross borrowing requirement (the sum of debt rollover and deficit financing). The financing requirement would rise from about 15% of GDP in 2026 to approximately 20% of GDP in 2034, substantially increasing refinancing risks, according to the author. According to him, the fiscal consolidation measures adopted so far are slowing the growth of public debt but are not sufficient to stabilize it. “There is fatigue and discontent in society after two years of freezes on public sector wages and pensions (which had, however, been raised significantly before 2025). Therefore, fiscal consolidation in 2027 could include a prudent indexation of pensions, which could be based on the projected inflation rate for that year—so as not to derail the path of public spending control. To protect vulnerable citizens, it is a positive step that the cap on markups for basic food items is being extended into 2026. “Significantly improved tax revenue collection would greatly facilitate the budgetary adjustment in the coming years,” Daianu added.