Fiscal Risk and Economic Impact in Romania: Constructing and Applying a Sustainability Index (2009–2024)

This study develops a Financial Sustainability Index (FSI) tailored to Romania, covering the period 2009–2024, in order to assess fiscal resilience through a multidimensional lens. The index integrates four standardized macro-fiscal indicators: public debt, budget deficit, public investment (GFCF), and capital expenditure ratio. These variables were selected based on their theoretical relevance and institutional use in evaluating long-term fiscal risk. All indicators were standardized using Z-scores, and the index was computed as a simple average, with directional adjustments reflecting their impact on fiscal sustainability. The results reveal three distinct phases in Romania’s fiscal evolution: (1) strong investment-driven sustainability between 2009–2012, (2) deterioration due to insufficient public investment from 2013–2018, and (3) gradual recovery starting in 2020, peaking in 2024. The study demonstrates that a composite indicator provides deeper insights into fiscal performance, highlighting the importance of investment efficiency and expenditure composition. The FSI also proves useful in identifying structural imbalances and shifts in fiscal policy. The findings have implications for risk monitoring and policy design, particularly in the context of emerging economies and contemporary economic uncertainty.