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flag Romania's 2026 reform aims to cut public jobs and raise taxes to reduce deficit, but delays and instability threaten growth.

flag Romania's government aims to pass public administration reform by late January 2026, targeting 10% cuts in central agency staffing and 30% in local administration, to save 3.5–4.5 billion RON. flag The 2026 budget, to be approved in February, projects a deficit of 6.0%–6.5% of GDP, down from 8.4% in 2025, supported by frozen public wages, a VAT increase to 21%, and tax hikes. flag Experts warn further VAT increases may be needed, while delays in reform and political tensions within the ruling coalition threaten fiscal credibility. flag Despite modest growth forecasts of 1.1%–1.4%, weak reforms and continued tax burdens on businesses risk slowing investment and growth. flag The justice system faces turmoil over a contested magistrates’ pension law and ongoing Constitutional Court review, while protests and a documentary alleging judicial corruption have fueled calls for reform. flag Political instability and weak governance remain key challenges.

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