BOLOJAN FISCAL POLICY HAD SERIOUS JUSTIFICATIONS : HIGHER TAXES REDUCED THE DEFICIT AND THE RISK OF A CREDIT DOWNGRADE , BUT CAME AT THE COST OF FOREIGN INVESTMENT

What happened: Romania's government led by Ilie Bolojan raised taxes in 2025 after the country posted the EU's largest budget deficit and risked losing its lowest investment-grade rating. Higher taxes reduced the deficit but also cut company profits, consumption and foreign investment. Key numbers: Deficit 9.3% of GDP in 2024, 7.9% in 2025, 3.82% after nine months. Why it matters: All three major agencies keep Romania at the lowest investment-grade rating with a negative outlook. A downgrade would force investment funds to sell Romanian government securities and raise state borrowing costs.

Romania's government led by Ilie Bolojan raised taxes in 2025 after the country posted the EU's largest budget deficit and risked losing its lowest investment-grade rating. Higher taxes reduced the deficit but also cut company profits, consumption and foreign investment.

All three major agencies keep Romania at the lowest investment-grade rating with a negative outlook. A downgrade would force investment funds to sell Romanian government securities and raise state borrowing costs.