Head of Fiscal Council warns: Risk of recession, in the midst of energy and inflationary shock

In this period in which economic and social stability is becoming increasingly fragile, due to the economic context dominated by a long-term energy shock, inflationary pressures and increased risks for the business environment and the population, it is necessary for the Romanian state to continue fiscal consolidation, to combat tax evasion and corruption, while the entrepreneurial environment supports the development of the national economy, if we want to avoid recession, declared Daniel Dăianu, president of the Fiscal Council, on Friday, during his intervention at the event presenting the Romanian Entrepreneurship Index for 2026, organized by IMM Romania.

Daniel Dăianu pointed out: "The situation is very serious internationally. Let's not fool ourselves! (...) Governments are scared. This is a crisis, an energy shock and I'm not the only one saying it in front of you, European Commission officials are already saying it; Dan Jorgensen, the European Commissioner for Energy, says it, who declared that this crisis will be long-lasting and will absorb economies; it will hit you too (editor's note - small and medium-sized entrepreneurs). I have already seen farmers revolting, and rightly so, because the cost of diesel increases. There may not be any fertilizers or they will be very expensive. So this is the situation, this crisis is a calamity and it is equivalent to a change in the relative price of energy. Without energy, it is impossible; we cannot function as a modern society. (...) What I can tell you is that (...) we will already have higher inflation everywhere, that the disinflation process will not be stopped. So disinflation will occur. In 2026 it will maybe there will be a different trajectory and the NBR will come up with figures, with a new forecast. Maybe the economic dynamics will be affected, even if you have to do everything that depends on you to resist and to do better. And that means entrepreneurial mind: to capitalize on everything that depends on you, to reduce costs, but to do it honestly. That is, everything you do should be done honestly. And I will return to the issue of tax evasion and tax optimizations, which are a curse, they are both a misfortune for Romania and they are a matter of national security, because those who do not pay and cheat hit those who are honest and it is not right. All this reflects a corrupt system; the public budget is used as a cash cow by all kinds of tricksters with a lot of power, because there is a lot of complicity. And, yet, there is an incapacity of politics, almost structural, to intervene”.

• The local business environment, essential for overcoming the current crisis

The President of the Fiscal Council stated that, in this whole context, we need luck to avoid an economic recession, and this luck must be complemented by an efficient business environment in such difficult times.

He added: "Entrepreneurial capacity is not tested in times of calm - when things are quiet - but is tested precisely in moments of stress. You know very well, you can see it in athletes, where this is tested. That's when adrenaline comes in, when there is danger. And this adrenaline must be felt at the level of countries. All countries are stressed, you know. Look at Europe, with all the governments, why are they behaving like this now? The business community, everyone is asking for support from whom? Also from the government. It has been like this since the world began and there have been governments. Governments had to intervene, to help, but especially the most vulnerable. I mentioned farmers and agriculturalists; it would be very bad if agricultural production in Romania suffered, because imports would automatically increase. And it is good that the Government thought about farmers and is thinking about transporters. There are sectors that must be privileged and must enjoy protection schemes. It was wise to extend for households, for citizens, this non-liberalization of gas prices, because you realize what could have happened. (...) And people, if they are hit very hard and suffer, you realize that the economy can also be destabilized. So it is good that the Government thought about something like this, without anticipating this crisis”.

The President of the Fiscal Council also spoke about the financing of SMEs and stated that the newly established, through the PNRR, Development and Investment Bank must help small and medium-sized companies, because, unfortunately, many of them are unbankable, that is, they cannot obtain bank loans, neither for working capital, nor for re-technologicalizing their activity. And in these conditions, many entrepreneurs use commercial credit, "because it is preferred to the rigors that are imposed by the scrutiny exercised by banks”, said Daniel Dăianu.

He also said that, in his opinion, the central banks in Europe do not reduce monetary policy rates this year, because there will be inflationary pressures and they have nothing to do under the given conditions.

"It is possible, although the probability is still low, that collective funds, collective bonds will eventually be issued in the European Union, which will have a similar effect to that during the pandemic. It is possible, it is a scheme that is in the minds of those in Brussels and some of the national governments, but there is still great opposition to collective bonds," said Daniel Dăianu.

• Fiscal consolidation must continue

He mentioned that it is necessary to continue fiscal consolidation in our country, because we are not in a situation where we can afford to slip from the budget deficit target. The President of the Fiscal Council stated: "The cost of borrowing has already increased due to the crisis, both for developed and developing economies. So, unfortunately, times are not favorable to us and I know that the population is suffering. You are supporting this fiscal consolidation which, essentially, as we say at the Fiscal Council, means that in Romania internal absorption will be reduced, that is, diminished. We are not saying that the distribution of the costs of the fiscal correction is fair; this correction has affected especially those with very low incomes and affects especially small and medium-sized enterprises, but it must continue. And if there will be protection, it has already been announced by the Government. I said that it is good that attention is focused on agriculture and transport and I agree that the exceptional profits of those who gain from this crisis must be taxed. I have no reservations from this point of view. Whoever argues that today the state should not intervene in the market mechanism means being, forgive me, an idiot or of bad faith; everywhere intervenes in such moments. You cannot have in a society some who are big winners and the majority of society loses, because you would have neither economic stability nor social stability”.

• President of the Fiscal Council: We need fair military spending and a strong fight against tax evasion

The President of the Fiscal Council also analyzed the situation of defense spending, which he said is a burden on the state budget at the moment, but he mentioned that we need to develop the country's defense capacity.

"I heard the Minister of Defense say "let's not be taken for granted'. Let's not be taken for granted with the acquisition of weapons; you saw that the companies that signed up for these competitions to equip the Army increased their weapons prices by 30% compared to the initial offer, which is not right. Let's not be taken for granted, as they are certainly financed with money from SAFE, this European Union program. But what are we doing? Are we also robbing Romania's budget? Are we robbing Romania because there is this concern to increase their profits? No. And the offset is small anyway. I also faced this problem of the almost non-existent offset when I was Minister of Finance, many years ago. We can also mention the position of the Minister of Economy, who announced that there are strategic sectors, enterprises of strategic importance, that must be defended even if they are in very great financial difficulties and even if the public budget does not have resources. That is, we must have a voice, I say, more dignified and stronger, without being populists or nationalists, but let's not be fooled. Romania has state interests and we must defend them”, said Daniel Dăianu.

The head of the Fiscal Council continued his intervention by stating that combating tax evasion is a matter of national security. He stated: "There are many interests opposed to improving the collection of taxes and duties in the public budget, and it is dramatic, because a much better collection could help the public budget enormously in the coming years. We will not finish fiscal consolidation at the end of 2026. If we end up with a budget deficit of around 6.2%, we may also have an impact of the necessary protection as a result of the energy shock. The question is: what do we do after 2026? Then, this fight against structural corruption, against tax evasion and avoiding paying taxes through optimizations must gather in an alliance all those who think in the interest of Romania and are honest people. Something like this is needed. Although the desire to earn money could be greater, I understand that this is human nature, let's not be naive, but Romania's situation is very complicated from the point of view of budgets and deficits. If we did not have effective results in fiscal consolidation, the debt public very quickly would go from 60% to 80%, and the financial markets would react and not let us get there; we would no longer have access to financing. This must be understood”.

Finally, Daniel Dăianu urged the representatives of small and medium-sized entrepreneurs, when dealing with their companies, should also think about others around them, stating that if the Romanian business environment suffers enormously and what is called the social fabric is torn apart, if people become more hostile and tear each other apart, it will be very bad for our country.