Romanian central bank adviser warns of budget crisis and lost EU funds as PSD demands his dismissal

Central bank adviser warns of fiscal deterioration

Eugen Rădulescu, an adviser to National Bank of Romania Governor Mugur Isărescu, issued a detailed public assessment on Monday regarding the country's economic trajectory. The senior economist stated that Romania has lived beyond its means for nearly a decade by accumulating debt that now threatens domestic stability. While noting that the domestic economy has shown signs of stabilization, Rădulescu identified severe external pressures, including European drought conditions that forced the shutdown of the Cernavodă nuclear power plant, Middle East conflicts keeping crude oil prices 50% above January levels, and political uncertainty in developed economies like the United States. His warning followed an earlier blog post that drew more than 276,000 readers on national economic vulnerabilities.

The political class remains locked in hand-to-hand combat, and the car we are all in is heading at full speed towards the wall.

Stalled reforms threaten European recovery funds

The central warning focused on the National Recovery and Resilience Plan (PNRR), with Rădulescu stating that Romania has only days left to rescue remaining funding tranches. Releasing the grants requires passing structural legislation that has remained stalled in parliament for five years. Because the current national budget was constructed around these European Union allocations, missing the deadline would create an immediate fiscal hole. Rădulescu warned that failing to secure the funds could lead credit rating agencies such as S&P to downgrade Romanian sovereign debt to non-investment grade junk status, triggering capital outflows for more than a decade.

If laws that have been dragging on for 5 years are not adopted, we will lose billions of euros, free European money, on which this year's budget was built.

Fiscal targets and public wage dispute

Rădulescu directed criticism at political leaders and trade union representatives for resisting required public sector wage reforms and amendments to the National Integrity Agency law. National public debt has exceeded 60% of GDP, while annual budget deficits have lingered near 6% of GDP. Official data showed that the budget deficit decreased from 9.3% of GDP in 2024 to 2.0% of GDP in the first half of 2026, which Rădulescu identified as the single positive fiscal achievement over the past year. He argued that yielding to union resistance against public wage adjustments would quickly undo this progress, warning of double-digit inflation, higher unemployment, and nominal income reductions.

Governing party demands immediate dismissal

The statements drew an immediate reaction from the governing Social Democratic Party (PSD). PSD Senator Daniel Zamfir publicly called on central bank Governor Mugur Isărescu to remove Rădulescu from his post, accusing the adviser of partisan bias while concurrently receiving a state pension and a central bank salary. Rădulescu, who previously served as director of the Financial Stability Directorate from 2015 to 2023, director of monetary policy in the 1990s, and president of CEC Bank between 2005 and 2007, maintained that his warnings were strictly economic rather than political.

To say that we will end up eating tree bark as an adviser to the BNR Governor forces Mugur Isărescu to quickly dismiss the reckless adviser.