Council of EU: Romania must limit spending growth to 2.8% this year, 2.6% next year

The Council of the European Union published a recommendation on Monday according to which, in order to exit the excessive deficit procedure, Romania must ensure that the growth rate of expenditures does not exceed 2.8% in 2025 and 2.6% in 2026 and set a deadline of October 15 for the country to adopt effective actions and present the necessary measures to ensure the timely correction of imbalances.At the same time, the institution also made recommendations for the following years regarding the increase in expenditures, which should not exceed 4.6% in 2027, 4.4% in 2028, 4.2% in 2029 and 4% in 2030.According to the cited source, this revised trajectory is "consistent with a minimum annual improvement of at least 0.5% of GDP in the structural balance and ensures that the general government deficit will be brought below the reference value according to the initial correction deadline in 2030".In addition, in response to the deviation from the initial trajectory, corrective measures have been brought forward, with an annual adjustment of the primary balance of around two percentage points per year in 2025 and 2025 and around one percentage point thereafter, supported by key reforms, including a review of the fiscal framework and ensuring that debt returns to below 60% of GDP over the medium term.Based on the trajectory set out in this recommendation, Romania's government deficit would decrease from 9.3% of GDP in 2024 to 2.8% of GDP in 2030. Government debt would continue to increase, from 54.8% of GDP at the end of 2024 to 62.3% of GDP at the end of 2028, before decreasing to 61.1% of GDP in 2030.The deadline for Romania to take effective action and submit the necessary measures to ensure the timely correction of the excessive deficit was set at 15 October 2025.The document published on Monday comes after the Economic and Financial Affairs Council (ECOFIN) meeting at the end of last week found that Romania had not taken effective measures in response to Brussels' recommendations on correcting the budget deficit, and this finding paves the way for new possible measures if the country does not adopt rapid action to reduce imbalances.In fact, the State Secretary in the Ministry of Finance, Alin Andries, who participated in the ECOFIN meeting, explained on Friday evening, on Digi 24, that Romania has not adopted measures regarding the increase in revenues, so it must adjust the schedule regarding the increase in expenditures this year and next year, and if it does not adopt effective measures to reduce the budget deficit by October 15, the country risks a suspension of European funds.The ECOFIN Council launched an excessive deficit procedure (EDP) against Romania on 3 April 2020.Earlier this year, on 21 January, ECOFIN approved Romania's Structural Budgetary Plan and the corrective path under the Excessive Deficit Procedure, accepting the adjustment path over a 7-year period, as well as the proposed reforms and investments.According to the then Minister of Finance, Tanczos Barna, the fiscal and budgetary plan aims to stabilize Romania's public debt in a context in which Romania continues to be among the top in the EU in terms of public investment - over 7% of GDP, reducing the budget deficit to below 3% over the period 2025-2031 and creating the premises for the sustainability of public finances.Romania received, in January, recommendations to maintain expenditures within the stipulated limits (the annual ceiling on the annual increase in net expenditures being 5.1% in 2025, 4.9% in 2026, 4.7% in 2027, 4.3% in 2028, 4.2% in 2029 and 3.9% in 2030) and to conclude the excessive deficit procedure by 2030.Romania ended 2024 with a budget deficit of 9.3% of GDP. After the first four months of 2025, the budget deficit stood at 2.95% of GDP.