Romania risks losing European funds
Romania may lose European money unless urgent measures are taken.
Ştefan Stoica, 05.06.2025, 13:50
For the first time in Romania’s post-communist history, negotiations on the formation of a broad government coalition started with a discussion on the government program, more precisely on measures to reduce the excessive budget deficit, and not with the political distribution of ministerial positions. It is good that it happened this way, but the urgency of forming a cabinet and adopting budget rebalancing measures remains. This is also because, if it does not implement the reforms it has pledged to, Romania risks entering a European procedure at the end of which it could lose community funds, starting with the end of next year.
The European Commission has presented the economic report of the Union, and it shows that Romania is the only country in the community block with excessive macroeconomic imbalances. The budget deficit is the largest in the EU and, according to the Commission, Bucharest has not taken any effective measures compared to what it assumed in January. The promised fiscal reform did not enter into force on the recommended deadline – in this case, April 1, 2025. According to the Commission, the deterioration of Romanian finances was caused, among other things, by the increase in current spending, especially on wages and pensions. Thus, public debt increased to almost 55% in 2024 and will reach almost 60% in 2025. Therefore, the Commission is asking Romania to present urgent and effective measures, otherwise it risks failing to reach the deficit correction objective by 2030.
As a result of these gaps and delays, Romania is the only country in the EU for which the Commission will submit to the Council a document in which it finds that the country has not taken any effective measures to reduce imbalances. The deadline is June 20 or possibly July 8, when the Economic and Financial Council meetings take place, and if the member states approve the Commission’s opinion, a procedure will be opened at the end of which Romania could lose funds. However, it will be a long-term procedure, with various stages that include communications and decisions between the Commission, the Council and the European Parliament, on the one hand, and the Romanian Government, on the other.
The Executive Vice-President of the European Commission, Roxana Mânzatu, remains optimistic and says that, although the situation is serious, the risks can be eliminated if the new Romanian government sends the proposals for reducing the deficit and reaches a rapid agreement with the Commission. As for the concrete measures to reduce the deficit, sources within the Commission claim that the large deficit would require tough and urgent measures, including an increase in VAT. In addition to the imbalances, Romania also has a problem with the National Recovery and Resilience Plan, as it has approximately 80% delays the implementation of reforms. The deadline for all Member States remains unchanged – August 31, 2026 for the implementation of the measures and December 31, 2026 for the last payment. (EE)
