The Romanian Association of Construction Entrepreneurs (ARACO) made a public appeal on Thursday to the Bologna Government to firmly commit to maintaining public investments and prioritizing the public interest in the medium and long term, according to a press release from the organization sent to AGERPRES.

„Reducing public investment is not just an accounting measure, but a decision with profound negative social and economic implications. The lack of investment in national infrastructure represents a major strategic error and an obstacle to Romania’s sustainable development. We make a public appeal to the Romanian Government to make a firm commitment to maintaining a healthy level of public investment and to prioritize the public interest in the medium and long term,” the ARACO appeal states.

The organization specifies that the Government’s intention to significantly reduce budget allocations for public investments, especially in the areas of transport infrastructure, health, education, environmental projects, rehabilitation of irrigation systems, rehabilitation of dams and flood protection dikes, energy and local development projects, risks seriously affecting Romania’s economic development, the stability and competitiveness of the construction sector, as well as citizens’ access to essential public services.

Contractors say construction activity recorded a real decline of about 2.7% in 2024, due to inflation, interest rates and rising costs. Also in 2024, the sector fell by 4% compared to 2023, reflecting the first signs of moderation after a record year.

Also, in the first quarter of 2025, the volume of works increased by 13.8% annually, fueled by capital repair works (+65%). Civil engineering constructions, which dominate the market (around 45%), had an advance of around 19% in Q1, but the residential sector decreased by 11.5%.

Construction material prices returned to the record level of 2022, after a relative decrease in 2023. The growth rate of construction costs ranged between 11.6% and 12.1% annually during 2023-2024.

According to ARACO, the elimination of tax benefits for construction employees has already generated substantial cost pressures affecting the competitiveness of the sector.

In addition, builders working in the field of public works (roads, bridges, hospitals, schools, water and sewer networks, rehabilitation of irrigation systems, rehabilitation of dams and flood protection dikes, etc.) are deeply affected by the interruption or postponement of state-funded projects. This situation generates, in the opinion of the association: blocking of ongoing contracts; increasing the risk of bankruptcy among SMEs in the construction sector; loss of jobs in a sector that provides income for over 400,000 employees; chain-related impact on related industries (material producers, transporters, designers, etc.).

„The sudden change in public investment policy sends a negative signal to the entire economy and affects the confidence of private investors. Builders have made financial commitments based on contracts concluded with public authorities, and possible budget cuts generate uncertainty and major financial losses,” ARACO claims.

The cited source shows that the direct effects on the final beneficiaries, the citizens, are the delay of public interest projects and the increase in long-term costs. Thus, Romania risks losing European funds by not completing projects financed from the PNRR or Cohesion Policy on time.

Under these conditions, ARACO urgently requests the Government to take the following measures: maintaining public investments financed from the budget in 2025, to avoid the collapse of ongoing contracts and economic losses in the chain; saving the absorption of European funds, by ensuring the continuation of critical European projects – including the PNRR; operationalizing a structured dialogue with relevant employer entities in the construction sector, especially SMEs, to identify short- and medium-term adaptation measures (including the urgent amendment of Government Decision no. 1/2018, Government Decision no. 965/2023 and others); predictable fiscal planning, including a clear calendar of public investments for 2025-2026, to restore the confidence of economic actors; assessing the transparency of capital expenditures and cost efficiency, according to OECD recommendations for responsible fiscal consolidation.

ARACO is the employers’ and professional organization in the construction sector founded in 1990. ARACO is a member of UGIR (General Union of Industrialists of Romania) and FIEC (Federation of European Construction Industries).

AGERPRES