Who can save Romania from the precipice. The surprising response of a reputed expert in taxation

Romania will need tens of billion euros to solve its problems related to the huge budget deficit, and in parallel to cope with a massive retirement wave and have money for arming. An impossible mission, judging by the lack of performance of the latest governments, but in reality there are some solutions, says Gabriel Biriș, one of the most appreciated tax specialists.

Romania is facing a real crisis. Photo: Shutterstock

Gabriel Biriș, economist and lawyer of fiscal law, widely recognized as one of the best fiscal specialists in Romania, warns us that he will be waiting for us, years in which we will have to reduce the deficit, and at the same time to cope with a wave of retirements that will affect the labor market. In addition, Romania will have to allocate 3% additional to the defense budget, which makes the situation even more difficult.

Gabriel Biriș refers to the huge adjustment of the budget deficit that Romania has to make until 2031 and posts on Facebook the chart that previously presented at the Aspes/BNR Conference, September 23, but also to other similar conferences. The graph appears, as the expert states, the evolution of the deficit in the last 22 years (2004 – 2025) and the adjustment to be made in the next 6 years (2026 – 2031). Further, Gabriel Biriș comes with some interesting remarks. These are the difficult pro-cyclical periods of 2009, 2020 and 2024, all marked by events that seriously shaken the economy of Romania.

The years that have shaken our economy

“We observe the following: a strong pro-cyclic evolution (Bad, Bad, Bad), correlated especially with the periods of elections. 3 Spikes: 2009 (Post Lehmann, but also the year Mr. Basescu had to be re-elected), 2020 (pandemic) and 2024-without crises, but with 4 rounds”says Biriș.

Equally interesting is the fact that in 2015 Romania had a deficit of under 1%, but later it reached 9%. Basically, no government has since been able to carry out the deficit so low, while the last, including the current government, is noted only by not being able to keep this deficit.

“It should be noted that in 2015, the deficit had reached below 1% GDP! For 2024, the deficit was budgeted at 5.5% GDP, later adjusted to 7%, finally reaching almost 9% GDP (on cash, that on ESA it was higher). For 2025, the deficit was budgeted to 7% GDP (following the ACOD with the Commission) and now to 8% PIB. We leave, following which by 2031 we will reach 2.5% GDP, ie an adjustment of about 6% GDP“He says.

The huge complications of the next few years

However, the situation will be complicated due to problems that are profiled from now on. Romania will have to invest huge amounts in the acquisitions of weapons, and in parallel to manage the waves of retirements that are announced from now.

Gabriel Biriș. Photo: Facebook

“Unfortunately, it will not be alone (adjustment – no), because: – we have to increase the expenses with the defense by 3% GDP, and we have to bear the” decrees “retirement cataclysm – about 2% GDP. So, in the next 6 years we will have to make an adjustment of 11% GDP, more or less!”warns Gabriel Biriș.

And that's not all. 2028 and 2029 are electoral years, which means, according to the Romanian tradition, that new electoral concessions will be made.

“Let us not forget that 2028 and 2029 will be electoral years! We already hear statements that from 2027 it will be easier for us … but the figures tell us something else!“He points out.

It is not enough to cut expenses and increase VAT

The bad news is, says Gabriel Biriș, that the reduction of the deficit can be made exclusively from the increasing increasing. However, there are solutions, but for this you will need a more inclined government towards reform and investments.

“I think it is obvious to anyone that such adjustment can not be made only by increasing income (even assuming that we lower the VAT GAP to the EU media), not only by reducing the expenses and not even by a combination of the two.”, Says the expert.

Later, Gabriel Biriș returned with a new post in which he detailed.

“Without investments in production we have no chance of adjusting the deficit to a reasonable level (below 3%)! And new investments (without state aid) do not have to see if we keep in the Barabaris fiscal legislation such as: – IMCA 1%, the construction tax of 0.5% of the value of the investments, the limitation to 1% of the deductibility and the deductibility and the IPR. years of the period of losses recovery, plus the limitation to 70% of their profit of their recovery ”, he writes.

On the same list, Gabriel Biriș adds the following:

“The quadruple of interest taxes (and so huge, due to the interest to which the state is borrowed!) Payed by Romanian companies to Romanian banks (the interest exceeding 1 million euros/year are non -deductible in companies, taxable, which on the same amounts pay the tax, depreciation, under the conditions of huge inflation. adds the expert.

Real solutions in given situation

After all, there is a need for a complete approach change, is the message of Gabriel Biriș, which captures the essence in a phrase: “We need a change of approach, we need to render the confidence of honest investors in Romania! In addition, we also need capital!”

In the end, he comes with some other ideas on how Romania could get out of the gap in which it deepens because of the big budget deficit

“We have subjected to debate an old idea of ​​mine, first presented a decade ago, an idea that I synthesize here: we have over 1,000 state companies. Many are for nothing, but there are companies that have value. I estimate their value to over 30 billion euros. as with the billions received by the state on privatizations, billions chopped on the budget!).“He says.

The amounts thus attracted to the budget could be used successfully to be invested with head and to attract other money.

“The money attracted (approximately equal to 30 billion euros) we invest, through holding, in subsidiaries, we modernize and increase their value. We can also create Venture Capital funds in which to invest with private. Investments not state aid! This is how Israel is the world power in technology! Obviously, for this we need super managers! Political.concludes Gabriel Biriș.