ECOFIN's recommendations to Romania - considerably tighten fiscal policy, implement reforms and investments

The EU's Economic and Financial Affairs Council (ECOFIN) recommends Romania to considerably tighten its fiscal policy in order to ensure that net expenditure does not overshoot the corrective path outlined under the excessive deficit procedure, and also to strengthen its external position.Furthermore, in line with the Council Recommendation of 21 January 2025, Romania is requested to implement the set of reforms and investments underpinning the extension of the adjustment period.According to the ECOFIN report, Romania should ramp up its overall defence and security spending and preparedness in these areas, while ensuring debt sustainability in line with the European Council conclusions of 6 March 2025.Given the applicable deadlines for the timely completion of reforms and investments in accordance with Regulation (EU) 2021/241, ECOFIN recommends Romania to expedite the implementation of the Recovery and Resilience Plan (NRRP), including the REPowerEU chapter, to accelerate the implementation of cohesion policy programmes (ERDF, JTF, ESF+ and CF), building - where appropriate - on the opportunities offered by the mid-term review, and making optimal use of EU instruments, including the opportunities provided by the InvestEU programme and the Strategic Technologies for Europe Platform, in order to improve competitiveness."Finalising the effective implementation of the recovery and resilience plan, including the REPowerEU chapter, is essential to boost Romania's long-term competitiveness through the green and digital transitions, while ensuring social fairness. In order to deliver on the commitments of the recovery and resilience plan by August 2026, it is essential for Romania to urgently accelerate the implementation of reforms and investments by tackling procurement delays, ensuring effective governance and strengthening administrative capacity," the report states.In order to facilitate this process, Romania needs to amend the presented plan and remove from it investments that are no longer achievable due to objective circumstances, while safeguarding the grant component. The systematic involvement of local and regional authorities, social partners, civil society and other relevant stakeholders remains essential to ensure broad ownership for the successful implementation of the NRRP.The report also calls on Romania to improve the quality and effectiveness of public administration and the predictability of decision-making, while ensuring that legislative initiatives do not undermine legal certainty, by carrying out appropriate stakeholder consultations, effective impact assessments and streamlined administrative procedures. In addition, the authorities should better prepare and prioritise large infrastructure projects, and accelerate their implementation, ensure that mature public investment projects are implemented in a timely manner and promote private investment to foster sustainable economic development.According to the ECOFIN report, Romania should reduce its reliance on fossil fuels, in particular by speeding up the roll-out of renewable energy, improving grid capacity, strengthening cross-border electricity connections, advancing regulatory reforms that de-risk clean energy projects and improve the transparency and efficiency of the permitting process.Romania should also phase out fossil fuel subsidies in the heating sector and invest in energy efficiency, environmental infrastructure and innovation, taking into account regional disparities such as the impact on coal regions, phase out existing emergency energy support measures and use the savings made to reduce the public deficit.ECOFIN calls on Romania to strengthen labor market participation of women and young people by improving the effectiveness of active labour market policies and children's participation in early childhood education and care, and to tackle skills shortages by improving basic and labour market-relevant skills of the workers, as well as by improving stakeholder engagement and making the best use of skills intelligence in education and skills policies.In addition, Romania needs to reduce poverty and social exclusion risks by extending social protection and improving its effectiveness, including through better access to essential and quality services, with a focus on integrated social, health, educational and employment services, in particular for Roma and other disadvantaged groups, while maintaining fiscal sustainability.