Romania Freezes Public Sector Wages to Cut Budget Deficit to 7% in 2021

Romania's 2021 state budget bill targets a budget gap of around RON80 billion, around 7% of the country's gross domestic product, down from a deficit of 9.8% in 2020, based on a GDP growth projection of 4.3%.

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In the bill published late Thursday, the government estimates revenue at RON365 billion and spending at RON445 billion in 2021.

The government, which plans to gradually adjust its finances to go back to the EU deficit limit of 3% in 2024, sees GDP growth at 4.3% in 2021, with a peak of 5% in 2023 and an annual average growth rate of 4.9% for the 2022-2024 horizon.

Public sector wages, which account for 26% of spending, will be frozen at last year's level. Romania had around 1.25 million public sector employees at the end of 2020, representing 22% of total employee numbers in the country.

Social assistance spending, which includes the pensions for the country's 5.2 million retirees, is estimated at RON143 billion this year from RON138.5 billion in 2020. pensions make up around one third of Romania's total budget spending.

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