An Alianta Conversation: Romania's Economic Crossroads

Alianta Board Member John Florescu sat down for the latest installment of the Alianta Conversation series with two of Romania's leading economic voices: Daniel Dăianu, academic and former finance minister, and Mihai Daraban, president of the Chamber of Commerce and Industry. The conversation covered Romania's growth trajectory, its fiscal reckoning, and the political instability now shadowing both.

Growth, Tempered by a Deficit Problem

Dăianu opened with the good news: Romania has posted rapid growth and continued convergence with its EU peers. But the fiscal picture behind that growth is less comfortable. The budget deficit hit 9% of GDP in 2024, driven largely by increases in public sector pensions and wages. Dăianu was direct about the limits of the fix: cutting public expenditure by 3 percentage points of GDP, he said, simply isn't realistic.

Part of the problem is structural. Romania's tax revenue sits at 27-28% of GDP, well below the 30-36% range seen in Czech Republic, Hungary, and Poland. Closing that gap by raising taxes to fight evasion has come with a cost — inflation spikes that have hit low-income earners and public sector workers hardest.

Still, Dăianu pointed to a genuine correction underway. The deficit has come down from over 9% to 7.7% last year, with a projected 6% this year if the current policy path holds. Financial markets, he noted, have responded positively.

The EU Loan and What Comes Next

Romania's €21 billion loan from the EU — renegotiated up from an initial €20 billion — remains on the table, though Dăianu acknowledged that meeting the reform thresholds attached to it will be difficult. With the current EU recovery program ending this year, he pointed to the SAFE program, focused on defense capacity, along with traditional structural and cohesion funds for agriculture and infrastructure, as likely partial replacements.

On the broader risk picture, Dăianu drew a clear line between Romania and countries further down the fiscal distress path: Romania's public debt remains below 60% of GDP, compared to Greece's 140%. He expects growth to resume in 2027, though he flagged an unfavorable international backdrop, including ongoing US-EU trade friction.

A Political Downgrade, Before a Fiscal One

The sharpest warning of the conversation was political, not economic. Dăianu cautioned that continued political instability could eventually trigger a fiscal downgrade and, in a worst case, a need for external financial assistance similar to what Romania faced 15 years ago. He doesn't expect Moody's or S&P to downgrade the country's rating in the near term — but he was blunt that Romania has already suffered a "political downgrade." The real risk, he said, isn't a lack of patience from government, but a lack of patience from markets watching political parties fail to reach agreement.

Administrative Gaps and Trade Realities

Daraban brought the conversation down to the operational level. Companies filing fiscal statements are up, but roughly 360,000 registered companies still haven't filed taxes, a gap he attributed to weak administrative digitalization. He and Florescu also discussed Romania's local government structure — 42 județe is, in Daraban's view, more than the country needs — and the limits of its economic diplomacy. Only about 15% of Romania's trade happens outside Europe.

The trade numbers with the US tell a mixed story. Goods exports fell from €3.6 billion in 2024 to €2.1 billion by November 2025, while services exports reached €5 billion. Romania's automotive sector remains a bright spot, employing 206,000 workers who supply components to major international brands including Mercedes. Energy costs are a real drag on competitiveness — three times higher than in China, twice as high as in the US — which is part of why Daraban sees an opening for Chinese greenfield investment in Romania's energy sector.

On agriculture, the numbers point to an efficiency problem rather than a capacity one: Romania holds 7% of the EU's farmers but produces only 3.2% of the bloc's agricultural output, a gap Daraban traced to small farm sizes. His recommendation for the road ahead: shift focus toward processed agricultural products and energy exports as the next landmarks for Romanian trade.

Watch the full Alianta Conversation, hosted by John Florescu with Daniel Dăianu and Mihai Daraban, on Alianta's YouTube channel.