Recommendations from ECOFIN

Finance minister Alexandru Nazare says Romania made the first step towards regaining the trust of investors and its European partners.

Daniela Budu, 09.07.2025, 14:00

The Romanian Minister of Finance, Alexandru Nazare, on Tuesday presented the Economic and Financial Affairs Council in Brussels with the measures adopted by the Government in Bucharest to reduce the budget deficit. According to Alexandru Nazare, this is the first step to halt the excessive deficit procedures which could have led to Romania’s losing European funding. The minister says Bucharest has taken the first step towards regaining the trust of investors and European partners. Romania now has a lower risk of losing European funds or of being downgraded by rating agencies during upcoming assessments on July 15. Alexandru Nazare also said that Bucharest can begin talks with the European Commission with a view to modifying its National Recovery and Resilience Plan:

“In order to negotiate the National Recovery and Resilience Plan, we had to have a fiscal package already adopted, green-lighted and that contained measures the Commission agrees with.”

The Romanian Government said its fiscal package to reduce the deficit was received well by the European Commission as “an important and positive step” in achieving the objectives of the excessive deficit procedure. This fiscal package, the Government says, paves the way for Romania to address its imbalances and achieve economic stability. Because it is under the European excessive deficit procedure, Romania will be monitored by the Commission and the latter’s assessments will be presented to the Council every six months. The first such assessment will take place earlier than planned, on October 15, to check the effects of the measures proposed by the government, followed by another assessment in April 2026.

Until then, the Economic and Financial Affairs Council of the European Union recommends, among other things, that Romania significantly tightens its budgetary policy to ensure that the level of net spending stays within the limits set in the excessive deficit procedure. ECOFIN recommends Romania to consolidate its overall spending on defence and security and its level of preparedness in these areas. At the same time, in order to fulfil its commitments laid down in its National Recovery and Resilience Plan, it is essential, says ECOFIN, for Romania to speed up the implementation of reforms and investments.

Meanwhile, protests are being staged in Bucharest and other cities around the country by public sector employees dissatisfied with the budget cuts envisaged by the Government. In fact, the National Bank warns that in the coming months, inflation will increase much more than initially estimated. The Bank says, however, that in the long term, the effects of this package will contribute to macroeconomic stability and the reduction of imbalances in the economy.