Ilie Bologan. photo: gov.ro
Reduce officials and costs
The Public Administration Reform Decree includes significant staff reductions and new performance evaluation criteria for civil servants, said Development, Public Works and Administration Minister Cheke Attila.
Under the plan, local governments will cut up to 30% of their positions, resulting in a 10% reduction nationwide. A total of 45,698 positions will be affected, including 12,794 currently occupied positions, 26,800 vacant positions and 6,102 counselors in the offices of elected officials.
The decree also provides for a 10% reduction in central government personnel costs and requires municipalities that cannot meet current salary costs to adopt new wage scales.
Minister Checa estimates that the financial impact of the public administration reform will amount to 1.6 billion Romanian lei (EUR 315 million) in 2026 and 3 billion lei in 2027.
Economic recovery measures
The government also approved an economic recovery package to support investment and long-term growth through a series of financing schemes and fiscal measures totaling about EUR 5 billion until 2032.
The measures include state aid for strategic investments, tax incentives for research and development, higher tax deductions for companies investing in equipment and machinery, simplified VAT collection procedures and cost deductions for companies listing on the stock exchange.
Also being introduced are incentive programs for timely payment of taxes by micro-enterprises and individuals, plus a RON 1 billion support program managed by the state-owned Bank for Investment and Development and the Export-Import Bank of Romania, targeting priority sectors such as manufacturing, critical minerals, high-tech research and development, defense and regional development.
“We are marking a strategic shift from consumption-based growth to growth based on productive investment, innovation and domestic production. We are now focusing on these areas because we have found in recent years that dependence on consumption leads to persistent fiscal imbalances,” Finance Minister Alexandru Nazare said at a press conference on the listed reforms.
Avoiding recession
The two decrees are the result of previous government efforts to optimize budget spending. In December, Ilie Bolojan’s government introduced a package of measures providing for a flat 1% sales tax rate for all micro-enterprises with an annual turnover of less than 100,000 euros, and in July it approved austerity measures including higher VAT and excise tax rates, more payers in the public health system and higher taxes for banks.
Earlier this month, the country’s national statistics office announced that Romania’s gross domestic product (GDP) contracted by 0.1% in the third quarter of 2025 and by 1.9% in the fourth quarter on a seasonally adjusted basis, marking two consecutive quarters of economic contraction, a process that is considered a technical recession.
Overall, the economy grew 0.6 percent in 2025, slowing from the 0.9 percent growth in 2024, the statistics office also said.
Prime Minister Elie Bolajan explained at the time that a technical recession does not indicate an economic crisis, but is a temporary adjustment needed to strengthen the economy in the long term.
