Finance Minister Nazare warns of recession risk, urges preparedness

Romania's economic growth is losing momentum, with investments down 30% in the first five months, requiring readiness for a potential recession at any time, Finance Minister Alexandru Nazare said Wednesday.When asked by journalists about the possibility of a recession in Romania, Nazare stressed that it is a real risk."It is a real risk, and we must be ready with solutions and measures to make any potential recession as smooth as possible. We should already have been prepared, as economic growth has slowed every year for the past four years. It was not hard to foresee a downturn if we analyzed the annual decline. And if you look at what the Fiscal Council has said at every budget adoption and every budget revision, as well as what many analysts have said ? we have many good analysts in Romania ? they have warned about these issues. They have warned precisely so that we could take counter-cyclical measures and set aside resources to stimulate the economy in such situations. What I can say is that I will do everything possible to find resources so we are prepared, even in the current context we are going through. But I must say it is extremely difficult," added Nazare.Based on current data, the Finance Minister described the economy as stagnant, adding that any potential contraction would be minor if European funds are absorbed. He stressed that Romania could maintain balance by accelerating the use of these funds."Today we are talking about stagnation. I do not want to speculate. It is very hard to assess the direction we will take. Even if we discuss an economic contraction, I don't believe it will be significant if we manage to absorb the funds we are set to receive. The key is to focus on these funds and spend them at a much faster pace than we have until now. I believe this is how we will maintain balance. It is very important to avoid a recession because a recession would mean higher financing costs and a completely different scenario than the one we are experiencing today," he explained.The minister also stressed that the first fiscal package, adopted in July, had positive effects because it allowed the protection of European funds."This governing coalition adopted Package 1, which had positive effects because it allowed us, first of all, to safeguard European funds, block the letter from the Council in its original form, and stop penalties on European funds that would have been applied starting in 2026. Package 1 also allowed us to reconfirm our rating, even ahead of the S&P assessment. I remind you that S&P did not have the report scheduled now; it was scheduled for the fall, and they moved it forward and reconfirmed the rating. A very important achievement. It is true that, according to other analyses and agencies and the Commission, the challenge is to maintain consistency in implementing these measures and not stop at Package 1. We need full consolidation from start to finish. For this, we need Package 2 and all other measures. I believe this needs to be discussed within the coalition with all coalition leaders, and we will reach a consensus because I do not believe any coalition leader wants Romania to be penalized in the October evaluation. The risks are far too high for Romania to face penalties in October," warned the Finance minister.