Recommendation for a COUNCIL RECOMMENDATION on Romania’s 2012 national reform programme and delivering a Council opinion on Romania’s convergence programme for 2012-2015
Date: 2012-05-30
Institutions: European Commission
Subjects: EU aid, EU financing, EU programme, Romania, balance of payments, budget deficit, budgetary equilibrium, economic convergence, economic reform, public finance

EUROPEAN COMMISSION 

Brussels, 30.5.2012  
COM(2012) 325 final 

Recommendation for a 

COUNCIL RECOMMENDATION 

on Romania’s 2012 national reform programme  

and delivering a Council opinion on Romania’s convergence programme for 2012-2015

{SWD(2012) 325 final} 

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Recommendation for a 

COUNCIL RECOMMENDATION 

on Romania’s 2012 national reform programme  

and delivering a Council opinion on Romania’s convergence programme for 2012-2015 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 5(2) thereof, 

Having regard to the recommendation of the European Commission2, 

Having regard to the resolutions of the European Parliament3, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

After consulting the Economic and Financial Committee, 

Whereas: 

(1) 

(2) 

On  26  March  2010,  the  European  Council  agreed  to  the  European  Commission’s 
proposal  to  launch  a  new  strategy  for  jobs  and  growth,  Europe  2020,  based  on 
enhanced coordination of economic policies, which will focus on the key areas where 
action 
to  boost  Europe’s  potential  for  sustainable  growth  and 
competitiveness. 

is  needed 

On 13 July 2010, the Council adopted a recommendation on the broad guidelines for 
the economic policies of the Member States and the Union (2010 to 2014) and, on 21 
October  2010,  adopted  a  decision  on  guidelines  for  the  employment  policies  of  the 
Member States4, which together form the ‘integrated guidelines’. Member States were 
invited  to  take  the  integrated  guidelines  into  account  in  their  national  economic  and 
employment policies. 

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OJ L 209, 02.08.1997, p. 1 
COM(2012)325 final 
P7_TA(2012)0048 and P7_TA(2012)0047 
Council Decision 2012/238/EU of 26 April 2012 

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(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

On  12  July  2011,  the  Council  adopted  a  recommendation  on  Romania’s  national 
reform programme for 2011 and delivered a Council Opinion on Romania’s updated 
convergence programme 2011-2014. 

On 23 November 2011, the Commission adopted the second Annual Growth Survey, 
marking  the  start  of  the  second  European  semester  of  ex-ante  and  integrated  policy 
coordination, which is anchored in the Europe 2020 strategy. 

On 2 March 2012, the European Council endorsed the priorities for ensuring financial 
stability,  fiscal  consolidation  and  action  to  foster  growth.  It  underscored  the  need  to 
pursue  differentiated,  growth-friendly  fiscal  consolidation,  to  restore  normal  lending 
conditions  to  the  economy,  to  promote  growth  and  competitiveness,  to  tackle 
unemployment  and  the  social  consequences  of  the  crisis,  and  to  modernise  public 
administration.  

On 2 March 2012, the European Council also invited the Member States participating 
in  the  Euro  Plus  Pact  to  present  their  commitments  in  time  for  inclusion  in  their 
stability or convergence programmes and their national reform programmes. 

On 23 April 2012, Romania submitted its 2012 national reform programme and, on 11 
May 2012, its convergence programme covering the period 2012-2015. 

On  6  May  2009,  the  Council  adopted  Decision  2009/459/EC5  to  make  available  to 
Romania  medium-term  financial  assistance  for  a  period  of  three  years  under  the 
provisions  of  Article 143  of  the  Treaty.  The  accompanying  Memorandum  of 
Understanding  signed  on 23 June 2009  and  its  successive  supplements  lay  down  the 
economic  policy  conditions  on  the  basis  of  which  the  financial  assistance  was 
disbursed.  Decision 2009/459/EC  was  amended  on 16 March 2010  by  Decision 
2010/183/EU6.  Following  Romania’s  successful  implementation  of  the  programme, 
and given a partial adjustment of the current account because of remaining structural 
weaknesses  in  Romania’s  product  and  labour  markets  which  make  the  country 
sensitive  to  international  price  shocks,  on 12 May 2011  the  Council  adopted 
Decision 2011/288/EU7  to  make  precautionary  medium-term  financial  assistance 
available to Romania for a period of three years under Article 143 of the Treaty. The 
accompanying  Memorandum  of  Understanding  was  signed  on  29  June  2011  and  its 
first supplement to it on 27 December 2011. 

The  second  formal  review  of  the  medium-term  financial  assistance  programme  that 
took place in late April-early May 2012 established that Romania's implementation of 
the programme remains on track. The cash fiscal deficit target for 2011 was met, while 
the ESA8 target would have been met had there not been a sizeable one-off measure 
linked  to  court  decisions  obliging  the  government  to  pay  compensation  to  certain 
categories of employees. The 2012 budget remains on track to achieve a deficit below 
3  %  of  GDP  in  ESA  terms.  The  Romanian  banking  sector  has  remained  resilient,  in 
spite of the on-going deterioration in asset quality, which has continued weighing on 
banking sector profitability. The programme conditionality in the financial sector was 

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OJ L 150, 13.6.2009, p. 8. 
OJ L 83, 30.3.2010, p. 19. 
OJ L 132, 19.5.2011, p. 15. 
European System of Accounts 

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met, albeit with some delays in certain cases. Progress in key structural reform areas, 
such as energy and transport and EU funds absorption have been uneven.  

(10)  After  two  years  of  decline,  real  GDP  of  Romania  grew  in  2011  by  2½%.  For  2012 
growth is expected to decelerate to 1.4 %. Domestic demand is forecast to be the major 
driver of growth. Public investment, supported by improving EU funds absorption, is 
expected to play a key role in 2012.  

(11)  Based  on  the  assessment  of  the  2012  convergence  programme  pursuant  to  Council 
Regulation  (EC)  No  1466/97,  the  Council  is  of  the  opinion  that  the  macroeconomic 
scenario  underpinning  the  budgetary  projections  in  the  programme  is  plausible.  The 
objective  of  the  budgetary  strategy  outlined  in  the  programme  is  to  reach  a  budget 
deficit below 3% of GDP in 2012, in line with the Council recommendations given to 
Romania  under  the  Excessive  Deficit  Procedure.  Thereafter,  it  aims  at  achieving  a 
medium-term  budgetary  objective  (MTO)  defined  as  a  deficit  of  0.7%  of  GDP  in 
structural  terms.  The  MTO  adequately  reflects  the  requirements  of  the  Stability  and 
Growth  Pact.  Following  the  planned  correction  of  the  excessive  deficit  in  2012,  the 
deficit  is  expected  to  decrease  further  to  2.2%  of  GDP  in  2013,  to  1.2%  of  GDP  in 
2014  and  0.9%  of  GDP  in  2015.  Based  on  the  (recalculated)  structural  budget 
balance,9  this  implies  an  improvement  in  the  deficit  by  1.5%  in  2012,  0.5%  in  2013 
and  0.7%  in  2014,  in  line  with  the  0.5%  of  GDP  benchmark  of  the  Stability  and 
Growth  Pact.  The  growth  rate  of  government  expenditure  is  in  line  with  the 
expenditure  benchmark  of  the  Stability  and  Growth  Pact  over  the  2012-2015  period. 
The programme foresees the achievement of the MTO in 2014. The main risks to the 
budgetary  targets  are  the  arrears  of  state  owned  enterprises,  as  well  as  potential  re-
accumulation of arrears at local government level and in the health sector. As regards 
public  debt,  it  was  below  34%  of  GDP  by  end  2011  thus  remaining  substantially 
below 60% of GDP. 

(12)  Romania  has  made  a  number  of  commitments  under  the  Euro  Plus  Pact.  These 
commitments, and the implementation of the commitments presented in 2011, relate to 
fostering  competitiveness  and  employment, 
to  making  public  finances  more 
sustainable and to reinforcing financial stability.  

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Cyclically  adjusted  balance  net  of  one-off  and  temporary  measures,  recalculated  by  the  Commission 
services  on  the  basis  of  the  information  provided  in  the  programme,  using  the  commonly  agreed 
methodology. 

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HEREBY RECOMMENDS that Romania should take action within the period 2012-2013 to: 

laid  down 

the  measures 

Implement 
in  Decision  2009/459/EC,  as  amended  by 
Decision 2010/183/EU, together with the measures laid down in Decision 2011/288/EU and 
further  specified  in  the  Memorandum  of  Understanding  of  23  June  2009  and  its  subsequent 
supplements, and in the Memorandum of Understanding of 29 June 2011 and its subsequent 
supplements. 

Done at Brussels, 

For the Council 
The President 

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