IMF Executive Board Concludes 2025 Article IV Consultation with Romania
IMF News, November 14, 2025
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- Published: November 14, 2025
Overview and context
- The Executive Board of the International Monetary Fund (IMF) concluded the Article IV Consultation with Romania on November 7, 2025. The authorities have consented to the publication of the Staff Report prepared for this consultation.
- The economy has experienced subdued growth, with real GDP growth softened to 0.9 percent in 2024 as strong private consumption (supported by robust wage growth) was offset by continued contractions in investment activities.
- Twin deficits have deepened further: rising fiscal deficits contributed to a widening current account deficit.
- Banking system resilience has improved with stronger balance sheets.
- The recent reform package for 2025–26, including tax reforms, is described as welcome and an important step forward; its full execution and additional adjustment measures from 2027 are highlighted as critical to restore fiscal and macroeconomic sustainability.
Near-term outlook and projections
- Growth projections:
- Real GDP growth (percent): 2024: 0.9; 2025: 1.0; 2026 (proj.): 1.4
- Inflation and monetary policy:
- Headline inflation rose to 9.9 percent (y/y) in September 2025 upon the removal of the electricity price cap and the VAT rate increase.
- Inflation is expected to remain elevated temporarily until mid-2026 before returning to the National Bank of Romania (NBR)’s tolerance band by end-2026.
- The NBR’s cautious approach is deemed appropriate; policy rate cuts should resume only after inflation is on a firm downward trend.
- Exchange rate:
- Greater exchange rate flexibility over the medium term would enhance resilience to shocks; a gradual increase in two‑way exchange rate flexibility is recommended, with some Directors urging caution in the near term due to Romania’s sizable foreign exchange exposure.
- Fiscal projections (percent of GDP):
- Revenue: 2024: 31.3; 2025: 32.2; 2026: 32.9
- Expenditure: 2024: 40.0; 2025: 40.4; 2026: 38.6
- Overall balance: 2024: -8.7; 2025: -8.2; 2026: -5.8
- Primary balance: 2024: -6.7; 2025: -5.3; 2026: -3.3
- Public debt: 2024: 57.5; 2025: 61.2; 2026: 62.5
- Balance of payments and other external indicators:
- Current account (percent of GDP): 2024: -8.0; 2025: -6.6
- FDI, net (percent of GDP): 2024: -1.3; 2025: -1.5; 2026: -2.2
- External debt (percent of GDP): 2024: 59.5; 2025: 63.5
- REER (percent change): 2024: 2.5; 2025: …
- Memorandum:
- Nominal GDP (billions of euros): 2024: 354; 2025: 373; 2026: 380
Risks to the outlook
- Downside risks to growth and upside risks to inflation:
- A sovereign credit rating downgrade remains a risk due to concerns about execution of planned fiscal consolidation for 2025–26 and the sustainability of public finances given the still high fiscal deficit.
- Stronger-than-expected wage growth, possibly driven by temporarily high headline inflation, could unanchor inflation expectations and delay normalization of core inflation.
- Upside scenario:
- Strong implementation of the fiscal adjustment and EU-funded investment projects could strengthen investor sentiment and lower risk premia faster than expected, leading to higher private investment and growth.
- Financial sector risks:
- Amid banks’ growing sovereign exposure, buoyant consumer credit growth, and sizable unhedged FX loans, authorities should continue monitoring asset quality, stress-testing liquidity conditions, and strengthening crisis management.
Executive Board assessment and recommendations
- Directors welcomed the large fiscal reform package for 2025‑26 and emphasized the criticality of full execution of planned fiscal consolidation in 2025–26 followed by additional adjustment in the medium term to buttress market confidence and ensure fiscal sustainability.
- Tax policy and fiscal governance:
- Further tax reform over the medium term should aim at mobilizing revenues and improving fairness while strengthening work incentives and remaining attractive to capital investments.
- A few Directors recommended caution in applying new tax measures to avoid further dampening domestic demand.
- Continued efforts in fiscal structural reforms, including public financial management, are recommended to improve fiscal governance and spending efficiency.
- Monetary policy:
- Re‑emergence of inflation pressures calls for a cautious monetary policy approach; policy rate cuts should resume only after growth of wages and prices moderate in a sustained manner.
- Exchange rate policy:
- Gradual increase over the medium term in two‑way exchange rate flexibility would enhance resilience; a number of Directors recommended a cautious approach toward greater exchange rate flexibility in the near term.
- Financial stability and macroprudential policy:
- Authorities should be prepared to recalibrate macroprudential policies and continue to enhance the AML/CFT framework.
- Structural reforms and EU funds:
- Advance structural reforms under the National Recovery and Resilience Plan and enhance public investment management to unlock available EU funds.
- Full use of EU funds, governance reforms (including better management of the large state‑owned enterprise sector), and greater regulatory predictability are critical to reinforce attractiveness for investment.
- Raising labor force participation through human capital investment would help mitigate the effects of an unfavorable demographic outlook.
- Planned transition to a low‑carbon economy, along with completion of the EU‑wide Energy Union, will help strengthen energy security.
Selected country facts and socioeconomic indicators
- Population (millions): 18.9
- Per capita GDP (€'000): 18,677
- IMF quota (millions of SDRs): 1,811
- Literacy rate (percent): 99.0
- (Percent of total): 0.4%
- Poverty rate (percent)1/: 21.1
- Main products and exports: Machinery and transport equipment, manufactured goods
- Key export markets: EU (Germany, France, Italy)
- GHG emissions per capita (tons of CO2 equivalent): 3.7
- Employment: Unemployment rate (percent): 2024: 5.4; 2025: 5.9; 2026: 5.8
- Prices: CPI inflation (period avg., percent): 2024: 5.6; 2025: 7.1; 2026: 6.7
IMF Executive Board Concludes 2025 Article IV Consultation with Romania