The Romanian government under Prime Minister Ilie Bolojan has announced a comprehensive package of fiscal austerity measures aimed at reducing the country's budget deficit, which exceeds 9.3%. Key components of the plan include raising the value-added tax (VAT) from 19% to 21%, restructuring VAT into two tiers at 11% and 21%, and increasing excise taxes on alcohol, tobacco, and fuel by 10%. The government also plans to raise the tax on dividends from 10% to 16% and introduce an additional tax on banking activities. Public sector salaries and pensions will remain frozen in 2026 to help contain expenditures. Other austerity steps include cutting student scholarships and taxing pensions. The government has committed to depoliticizing the National Agency for Fiscal Administration (ANAF), with reforms targeting inefficiencies and alleged preferential treatment of certain companies. A significant reduction of approximately 20% of public sector employees is planned. The government has assumed responsibility in Parliament for this fiscal package, emphasizing the urgency to avoid Romania falling into a severe recession or defaulting on payments. Consultations have been held with trade unions and employer representatives, amid warnings of potential social unrest. The first set of measures is effective from August 1, 2025. Additionally, some state company directors have voluntarily reduced their salaries in response to calls for austerity. Bolojan has indicated that these unpopular measures are temporary and necessary to restore economic credibility and enable access to European Union funds. The government is preparing further reforms targeting state companies, health, and local administration sectors.