Romania

Significant slowdown in economic growth amid surging inflation

Romania's economy is currently experiencing a marked deceleration, as evidenced by the second-quarter GDP growth of just 0.3% year-over-year, bordering on stagnation. This slowdown is primarily driven by subdued private consumption, which has emerged as the key drag on overall activity. Compounding this issue are external factors, including sluggish growth in major trading partners and a persistently high fiscal deficit that has inflated imports, thereby exacerbating the negative impact of net exports on GDP. Looking ahead, Romania faces additional headwinds from an ongoing fiscal austerity programme aimed at stabilising public finances. The recent hike in the VAT rate, which increased the standard rate from 19% to 21%, and the narrowing of the scope of goods eligible for the reduced rate are already manifesting in higher prices, which is likely to further erode household purchasing power and suppress aggregate demand. This could deepen the contraction in private consumption, creating a challenging environment for recovery in the near term.

There are pockets of potential support, particularly from investments fuelled by EU funds. With 2026 marking the final year for disbursements under current programmes, Romania stands to receive up to EUR 17 billion in the coming year, much of it directed toward critical infrastructure projects, such as industry decarbonisation, deployment of renewables and digitalization of public administration and public services. This influx could spur a rebound in investment activity, providing a counterweight to weakening consumption. Nonetheless, this investment surge, while beneficial, is unlikely to fully offset the declines in household consumption, suggesting a weak overall growth trajectory.

Romania's inflation trajectory has shifted markedly from a phase of stable yet elevated rates to a sharp acceleration, with the CPI surging to 9.9% year-over-year in August 2025, driven primarily by the unfreezing of energy prices and hikes in standard VAT rates. Looking ahead, the inflation path hinges on the scope of additional fiscal consolidation measures; barring further VAT alterations, the base effects from these tax changes should dissipate, paving the way for a return to inflation rate around 4% by August 2026. On the other hand, the austerity package itself will be a source of disinflationary pressure as well. The anticipated freeze in public sector and pension pay rises will weigh on the increase in nominal wages. Substantial reduction in fiscal spending should also depress the aggregate demand, exacerbating a downward pressure on the prices. Amid this backdrop, the National Bank of Romania (NBR) has decided to abstain from monetary easing, unlike many central banks in the region. The political turmoil at the beginning of 2025 has also put pressure on the Romanian Lei. To maintain the peg, the NBR had to abstain from making any interest rate cuts. While the political instability has already evaporated, the NBR is still maintaining a restrictive monetary policy to curb any additional inflationary pressures.

Austerity to curb the twin deficits

Romania’s fiscal policy in 2025 was dominated by a shift toward austerity, driven by both macroeconomic and institutional pressures. After ending 2024 with the largest fiscal deficit in the European Union, the government initiated a consolidation programme following the May presidential elections. Above and beyond concerns over fiscal sustainability, the move was motivated by the risk of losing its investment-grade credit rating (currently BBB- by Fitch), which would significantly raise borrowing costs (which are already high relative to regional peers) and, to a lesser extent, by the ongoing Excessive Deficit Procedure opened by the European Commission. The adjustment path has been be gradual: according to the government, the deficit is projected to decline by 0.61 percentage points of GDP in 2025, primarily through higher VAT and excise duties. A more substantial correction is expected in 2026, with a planned reduction of around 3 percentage points of GDP, supported by increased dividend taxation (from 10% to 16%), higher health insurance contributions, and freeze in public sector wages and pensions. Although politically unpopular, the programme is likely to continue as the government enjoys a wide decision-making window before the next electoral cycle in late 2028.

Romania’s excessively accommodative fiscal stance has amplified macroeconomic imbalances, and has notably widened the current account deficit. The surge in domestic demand, fuelled by expansionary fiscal measures, has manifested in higher goods imports and consequently reinforced the twin deficit dynamic. Looking ahead, the planned fiscal consolidation is expected to curb these pressures by moderating domestic absorption and improving external balances. However, the country’s export performance faces geopolitical headwinds: ongoing global trade tensions is likely to indirectly curb Romania’s export growth through Germany – its key trading partner and the EU’s largest exporter to the US – despite Romania’s negligible direct exposure to the US market (around 2% of total exports). A more positive development has arisen in services exports, particularly in road transport services, which have rebounded following Romania’s accession to the Schengen Area at the start of 2025.

Romania’s post-election landscape

The period spanning late 2024 and the first half of 2025 was marked by exceptional volatility in Romania’s political landscape. The turbulence began with the barring of far-right candidate C?lin Georgescu from the second round of the presidential elections in December 2024, a decision that led to a re-run of the whole election process in May 2025. Political volatility intensified the day after the first round of voting when incumbent Prime Minister Marcel Ciolacu announced his resignation. Ciolacu cited the disappointing performance of the governing coalition’s candidate, Crin Antonescu, who was representing the alliance between the center-left Social Democratic Party (PSD) and the center-right National Liberal Party (PNL) and who failed to advance to the runoff stage. The second round of the presidential elections resulted in a decisive victory for Nicu?or Dan, the independent and center-liberal mayor of Bucharest. Running as a moderate outsider, Dan successfully capitalised on widespread public dissatisfaction with Romania’s traditional political establishment. His campaign resonated with voters seeking pragmatic governance and a departure from entrenched party politics. Despite the coalition’s weak showing in the presidential election, it retained control of the government following a parliamentary vote of confidence in a new cabinet led by Ilie Bolojan, leader of the PNL. The administration was formed through a broad-based coalition comprising four parties: the PNL, PSD, the liberal Save Romania Union (USR), and the Democratic Alliance of Hungarians in Romania (UDMR) which advocates for the Hungarian minority. The coalition agreement includes a rotating premiership, with leadership scheduled to shift to a PSD representative in April 2027.

The primary opposition force remains the nationalist-conservative and Eurosceptic Alliance for the Union of Romanians (AUR), under the leadership of George Simion, the former opposition candidate in the presidential elections. AUR’s growing influence underscores the polarised nature of Romania’s political environment and signals potential challenges for the governing coalition. Looking ahead, the new administration faces major policy challenges, notably the introduction of unpopular fiscal reforms aimed at reducing Romania’s record-high budget deficit and at the same time minimising their impact on low-income households. These austerity measures are expected to be a major source of internal friction within the coalition; it will test its cohesion and ability to deliver on governance promises amid mounting economic and social pressure.

Payment

Bank transfers are becoming the most common payment method in Romania. The main Romanian banks are now linked to the SWIFT electronic network, which provides low-cost, flexible and rapid processing of domestic and international payments.

Professionals often choose to use cheques as a payment method for the equivalent value of purchased and received goods and services. Although cheques are considered to be a secure method of payment, the beneficiary of the cheque can only present it to the bank and cash-in the amount designated.

While promissory notes are mainly used as a means to guarantee a professional’s trade debts, in practice they are often used as a payment method. In Romanian law, promissory notes represent a credit instrument under private signature, created by the issuer as debtor, by which the issuer promises to pay a fixed amount of money on a certain date, or upon presentation to another beneficiary acting in the capacity of a?creditor.

Both cheques and promissory notes become enforceable titles once signed by both parties. If they are not cleared due to the absence of cash, forced execution proceedings can be initiated against the debtor.

Debt Collection

Amicable phase

Legal proceedings

FAST-TRACK PROCEEDINGS

Summons for payment (Art. 1013-1024 NCPC)

This procedure applies to certain liquid and eligible debts with a value exceeding RON 10,001, resulting from a civil contract. These include contracts concluded between a professional and a contracting authority, with the exception of debts registered in a statement of affairs, within an insolvency procedure. The debtor will be summoned to pay the due amount within 15 days of receipt. The ordinance is enforceable even if a request for cancellation is brought against it. Nevertheless, the debtor may raise an appeal against enforcement, under common law.

Summons of a lower value

This procedure was designed as an alternative to common law proceedings and to the ordinance procedure. Its aim is to enable a fast resolution to patrimony litigations, when the value does not exceed RON 10,000 and does not refer to matters excepted by the law. The procedure entails the use of standard forms, approved by Minister of Justice. These include the request form, the form for completion and/or rectification of the request form and the response form. Romanian legislation expressly states that only documents can be presented as evidence.

The decision of the court can be submitted to appeal within 30 days under common law, except for requests relating to debts with a maximum amount of RON 2,000. By way of derogation from the common law however, the exercise of appeal does not suspend the enforcement procedure.

ORDINARY PROCEEDINGS

Common Law procedure

The judge orders the communication of the request to the debtor, who must submit a statement of defence within 25 days of the petition. The creditor is obliged to submit an answer within 10 days, while the debtor must acknowledge the answer. Within three days of the date of the answer to the statement of defence, the court establishes the first trial date, where both parties will be summoned within a maximum period of 60 days. This process is somewhat lengthier, as further evidence is considered such as accounting expertise, cross-examination of the parties involved and witness testimonies. Following these deliberations, the court renders a legal decision. Appeals can be made to the upper court within 30 days of the decision being rendered. Extraordinary remedies are the appeal, the appeal for annulment and?revision.

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Enforcement of a Legal Decision

The enforcement procedure implies the existence of a valid and legally rendered enforceable title. It necessitates the failure of the debtor to execute its obligations, the existence of an enforcement procedure request formulated by the rightful creditor to a bailiff and finally the fulfilment of conditions within the execution procedure. The enforcement procedure commences at the request of a creditor through various means such as sequestration and sale of tangible or non-tangible assets.

For judgments rendered in EU countries, special enforcement mechanisms are at the creditor’s disposal. These include EU Payment Orders and the European Enforcement Order. Awards issued by non-EU members are normally recognised and enforced, provided that the issuing country is party to a bilateral or multilateral agreement with Romania. If this is not the case, exequatur proceedings will ensue in front of domestic courts, as stated under Romanian private international law.

Insolvency Proceedings

OUT-OF-COURT PROCEEDINGS

According to the 2014 insolvency law, the concordat preventiv consists of an agreement with the creditors whereby the debtor proposes a business recovery plan, which includes a payment scheme for the creditors’receivables. By signing this agreement, the creditors confirm their support in helping the debtor to overcome its financial difficulties. The procedure is managed by a special receiver, who draws up an offer to the creditors. This must be approved by at least 75% of the creditors within 60 days from the date when they receive it. It is also subject to the approval of a syndic judge.

INSOLVENCY PROCEEDINGS

This is a preliminary procedure, which can be followed by a reorganisation procedure, or a bankruptcy procedure.

REORGANISATION PROCEEDINGS

The judicial reorganisation procedure requires the drafting, approval and implementation of a reorganisation plan aimed at the debtor successfully redressing its activity and performing the repayment of its debts, in accordance with an agreed payment schedule.

The plan can provide for the financial or operational restructuring of the debtor’s activity, corporate restructuring by modifying the share capital structure, or selling assets. aThe reorganisation plan is subject to the approval of the general meeting of creditors. During this period, the debtor is represented by a special administrator.

BANKRUPTCY PROCEEDINGS

In the event that no reorganisation agreement is reached, the debtors will enter bankruptcy. The purpose of bankruptcy proceedings is to convert the debtor’s assets, for the repayment of creditors’ receivables. During this procedure, the debtor is represented by the judicial liquidator. The latter will perform the clearance of all the assets of the debtor and the sums obtained will be distributed to the creditors, based on the priority ranking as documented in the final consolidated debt table.

Last updated: November 2025