REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL CONVERGENCE REPORT 2024 (prepared in accordance with Article 140(1) of the Treaty on the Functioning of the European Union)
Date: 2024-06-26
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Bulgaria, Czechia, Economic and Monetary Union, Hungary, Poland, Romania, Sweden, convergence criteria, euro area

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 26.6.2024  COM(2024) 270 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL CONVERGENCE REPORT 2024            (prepared in accordance with Article 140(1) of the Treaty on the Functioning of the European Union)       {SWD(2024) 270 final}  
 
 
1. 

PURPOSE OF THE REPORT 

The euro is meant to be the single currency of the European Union as a whole. It is now used every day 
by around 350 million people in the 20 Member States of the euro area. The practical benefits include 
more  stable  prices,  lower  transaction  costs  for  people  and  businesses,  more  transparent  and 
competitive markets and increased intra-EU and international trade. The euro is also the second most 
used currency worldwide. 

Article 140(1) of the Treaty on the Functioning of the European Union (TFEU) requires the Commission 
and the  European  Central  Bank  (ECB)  to  report  to  the  Council, at  least  once  every  2  years, or at  the 
request  of  a  Member  State  with  a  derogation1, on  the  progress  made  by  Member  States in  fulfilling 
their obligations on the achievement of economic and monetary union. The latest Commission and ECB 
convergence reports were adopted in June 2022. 

The  2024  Convergence  Report  covers  the  following  six  Member  States  with  a  derogation:  Bulgaria, 
Czechia,  Hungary,  Poland,  Romania  and  Sweden2.  The  staff  working  document  accompanying  this 
report provides a more detailed assessment of the state of convergence in these Member States3. 

Article  140(1)  TFEU  requires  the  reports  to  include  an  examination  of  the  compatibility  of  national 
legislation,  including  the  statutes of  national  central  banks,  with  Articles 130  and  131  TFEU  and  the 
Statute  of  the  European  System  of  Central  Banks  and  of  the  European  Central  Bank  (‘the  ESCB/ECB 
Statute’). The reports must also examine whether a high degree of sustainable convergence has been 
achieved in the Member State concerned by reference to the fulfilment of the four convergence criteria 
(price  stability,  public  finances,  exchange  rate  stability  and  long-term  interest  rates),  and  by  taking 
account  of  other  factors  relevant  to  economic  integration  and  convergence  mentioned  in  the  final 
subparagraph of Article 140(1) TFEU. The four convergence criteria are developed further in a protocol 
annexed to the Treaties (Protocol No 13 on the convergence criteria). 

The convergence assessment presented in this report has been influenced by several major economic 
shocks  and  policy  developments  over the  past  2  years.  Russia’s  full-scale  invasion  of  Ukraine  on  24 
February  2022  and  the  subsequent  use  of  energy  as  a  political  weapon  disrupted  the  global  energy 
market  and  supply  chains.  Energy  prices  reached  record  highs  in  August  2022.  The  EU  economy  has 
shown  remarkable  resilience  in  this  challenging  environment.  It  has  successfully  reduced  its 
dependence on Russian fossil fuels and limited the adverse impact on economic activity. Nonetheless, 
under the pressure of energy, food and other commodity prices, headline inflation in the EU peaked at 
11.5%  year-on-year  in  October  2022,  while  inflation  divergences  across  the  EU  Member  States  also 
reached  historic  highs.  The  EU  economy  lost  momentum  in  2023,  weakened  by  the  erosion  of 
households’  purchasing  power,  a  subdued  external  environment  and  tighter  financing  conditions.  As 
energy  prices  retreated  from  their  peaks  and  monetary  tightening  worked  its  way  through  the 
economy, annual HICP inflation fell sharply, reaching 2.7% in May 2024. The surge in energy prices in 
2022  also  led  many  Member  States  to  take  emergency  energy  support  measures  to  cushion  its 
economic  and  social  effects.  In  2023,  the  cost  for  the  government  deficit  of  those  emergency 
measures is estimated at almost 1% of GDP for the EU as a whole, but a sizeable reduction in energy-
related measures is projected in 2024 (by 0.8 percentage point to 0.2% of GDP). 

At  the  same  time,  the  steady  implementation  of  the  Recovery  and  Resilience  Facility  (RRF)  and  the 
Cohesion  Policy  programmes  is  continuing  to  support  major  reforms  and  investments  across  a  wide 
range of policy areas in the EU and support fiscal sustainability. 

Designed  as  a  response  to  the  economic  and  social  fall-out  from  the  COVID-19  pandemic  and 
established  in  February  2021,  the  RRF  is  the  centrepiece  of  NextGenerationEU  (NGEU),  the  EU’s 
recovery instrument. It has also proven to be an agile instrument, helping Member States to deal with 
the  above-mentioned  challenges  and  circumstances.  In  the  context  of  the  REPowerEU  plan,  Member 
States  benefitted  from  additional  resources  through  the  introduction  of  REPowerEU  chapters  in  their 
Recovery and Resilience Plans (RRP), including reforms and investments that diversify the EU’s energy 

1   The  Member  States  that  have  not  yet  fulfilled  the  necessary  conditions  for  the  adoption  of  the  euro  are  referred  to  as  ’Member 
States with a derogation’. Denmark negotiated an opt-out before the adoption of the Maastricht Treaty and does not participate in 
the third stage of economic and monetary union. 

2   Denmark has not expressed an intention to adopt the euro and is therefore not covered in the assessment. 
3   The  cut-off  date  for  the  data  used  in  this  report  is  18  June  2024.  The  convergence  assessment  is  based on  a  range  of  monthly 

convergence indicators that have been calculated up to May 2024. 

1 

 
 
supplies, accelerate the green transition and support vulnerable households. By  early June 2024, EUR 
240.3  billion  had  been  disbursed  against  the  fulfilment  of  milestones  and  targets  for  ambitious 
reforms and investments. Commission modelling suggests that NGEU has the potential to increase EU 
real GDP by up to 1.4% in 2026 above a no-NGEU scenario4. 

EU  Cohesion  Policy  funds  provide  EUR  378  billion  to  Member  States  for  the  2021-2027  period. 
Cohesion policy concentrates in fields that are critical for promoting convergence and competitiveness 
through  long-term  investment  in  line  with  EU  priorities.  Its  interventions  aim  particularly  to  improve 
productivity, foster sustainable growth, boost innovation and develop the skills of the labour force, as 
well as grant better access to public services and foster the integration in the single market through 
better infrastructure.  

Cohesion  Policy  has  a  strong  positive  impact  on  the  structure  of  the  EU  economies.  Recent  model 
simulations suggest that the 2014–2020 and 2021–2027 programmes, taken together, could increase 
EU GDP by close to 1% at the end of their implementation. The impact of the policy is particularly high 
in the main beneficiaries of the policy, thereby supporting convergence of these countries. 

The general escape clause in the Stability and Growth Pact was deactivated at the end of 2023. In April 
2024, the European Parliament and the Council adopted the legislation reforming the EU fiscal rules5. 
Over the next months, the Member States will prepare their first medium-term fiscal-structural plans, 
outlining fiscal, structural and investment policies for the next 4 to 5 years. The reformed framework 
promotes debt sustainability and economic growth. On 19 June 2024, as part of its European Semester 
spring  2024  package,  the  Commission  published  a  report  under  Article  126(3)  TFEU  assessing 
compliance  with  the  deficit  criterion  of  the  Stability  and  Growth  Pact  in  twelve  EU  Member  States, 
including Czechia, Hungary and Poland6. On the basis of the conclusions of its report, the Commission 
confirmed that in July, and after considering the opinion of the Economic and Financial Committee, it 
will propose to the Council to adopt decisions establishing the existence of excessive deficit situations 
for  the  Member  States  for  which  this  is  warranted.  The  assessment  of  the  convergence  criterion 
dealing with the government budgetary position presented in this report  therefore takes into account 
the conclusions of the report under Article 126(3) TFEU.   

Convergence criteria 

The  examination  of  the  compatibility  of  national  legislation,  including  the  statutes  of  national 
central banks of Member States with a derogation, together with Article 130 TFEU and the compliance 
duty  under  Article  131  TFEU,  includes  an  assessment  of  observance  of  the  prohibition  of  monetary 
financing  (Article  123  TFEU)  and  the  prohibition  of  privileged  access  to  financial  institutions  (Article 
124  TFEU);  consistency  with  the  ESCB's  objectives  (Article  127(1)  TFEU)  and  tasks  (Article  127(2) 
TFEU), and other aspects relating to the integration of national central banks into the ESCB. 

The first indent of Article 140(1) TFEU defines the price stability criterion as ‘the achievement of a high 
degree of price stability; this will be apparent from a rate of inflation which is close to that of, at most, 
the three best performing Member States in terms of price stability’. 

Article 1 of the Protocol on the convergence criteria further provides that ‘the criterion on price stability 
[…] shall mean that a Member State has a price performance that is sustainable and an average rate of 
inflation,  observed  over  a  period  of  one  year  before  the  examination,  that  does  not  exceed  by  more 
than 1.5 percentage points that of, at most, the three best-performing Member States in terms of price 
stability.  Inflation  shall  be  measured  by  means  of  the  consumer  price  index  on  a  comparable  basis, 
taking into account differences in national definitions’7. 

The sustainability requirement implies that the satisfactory inflation performance must be attributable 
to  the  behaviour  of  input  costs  and  other  factors  that  influence  price  developments  in  a  structural 
manner,  rather  than  the  influence  of  temporary  factors.  The  convergence  examination  therefore 

4      QUEST  is  the  global  macroeconomic  model  that  the  Directorate  General  for  Economic  and  Financial  Affairs  (DG  ECFIN)  uses  for 
macroeconomic 
https://economy-finance.ec.europa.eu/economic-research-and- 
See 
databases/economic-research/macroeconomic-models/quest-macroeconomic-model_en and see the Staff Working Document on the 
RRF mid-term evaluation for further information on QUEST’s results regarding the macroeconomic impacts of the RRF. 

research. 

analysis 

policy 

and 

5   OJ L, 2024/1264, 30.4.2024; OJ L, 2024/1263, 30.4.2024; and OJ L, 2024/1265, 30.4.2024. 
6   Romania has been subject to an excessive deficit procedure since the spring of 2020. 
7   For the purpose of the price stability criterion, inflation is measured by the Harmonised Index of Consumer Prices (HICP) defined in 

Regulation (EU) 2016/792 of the European Parliament and of the Council. 

2 

 
 
includes  an  assessment  of  the  factors  that  have  an  impact  on  the  inflation  outlook  and  is 
complemented  by  a  reference  to  the  most  recent  Commission  inflation  forecast8.  The  report  also 
assesses whether the country is likely to meet the reference value in the months ahead. 

The  inflation  reference  value  was  calculated  as  4.1%  in  May  2024,  with  the  Netherlands,  Italy  and 
Latvia being the three ‘best-performing Member States’9. 

Denmark, Finland and Belgium have been identified as outliers  because their inflation rates deviated 
by  a  wide  margin  from the  euro  area  average  and  were  driven  by  country-specific  factors  that  limit 
their scope to serve as meaningful benchmarks for other Member States10. This is consistent with past 
practice,  with  outliers  having  also  been  identified  in  the  Convergence  Reports  of  2004,  2010,  2013, 
2014, 2016 and 2022. Outliers are identified on the basis of two criteria taken in combination: i) an 
inflation  rate  substantially  below  the  euro  area  average  and  ii)  an  inflation  rate  driven  by  country-
specific factors that cannot be seen as representative of the process that is driving inflation in the euro 
area. In past convergence reports, Member States that had an inflation rate 1.5 percentage points or 
more below the euro area were generally considered as outliers. In May 2024, the 12-month average 
inflation rates of Denmark, Finland and Belgium were respectively 2.3, 1.6 and 1.5 percentage points 
below the euro area average of 3.4%. 

In  addition,  the  inflation  performances  of  Denmark,  Finland  and  Belgium  were  driven  by  country-
specific factors. In the case of Denmark, the country-specific factors that drove the relatively very low 
average inflation rate included a faster unwinding of the exceptional energy inflation shock than in the 
euro  area  that  was  mainly  due  to  the  fact  that  most  electricity  contracts  in  Denmark  have  variable 
prices, which are adjusted either monthly or quarterly. This led to a  much  faster transmission of the 
drop in wholesale energy prices to retail prices in Denmark than the euro area average. A very low rate 
of inflation for food and non-energy industrial goods compared with the euro area also contributed to 
the low inflation rate in Denmark.  

In  the  case  of  Finland,  the  relatively  very  low  average  inflation  rate  compared  with  the  average 
inflation  rate  of  the  euro  area  as  a  whole  reflected  lower  energy  inflation  and  an  adjustment  by 
Statistics Finland to the price index of electricity because the rise in prices had been erroneously taken 
into  account  twice  in  the  index11.  The  correction,  which  was  introduced  in  August  2023,  reduced  the 
year-on-year HICP  inflation  rate  by  0.7  percentage  point  in  that  month.  It  will  continue  to  artificially 
reduce HICP inflation in Finland until July 2024. Furthermore, the 12-month average of HICP inflation 
excluding energy and food in Finland was significantly below the corresponding inflation rate  for the 
euro  area  as  a  whole,  reflecting  a  much  weaker  cyclical  position  and  weaker  wage  growth  than  the 
euro area as a whole. 

In the case of Belgium, the country-specific factors that drove the relatively very low average inflation 
rate  include  lower  retail  energy  prices  in  2023.  After  a  rapid  transmission  of  exceptionally  high 
wholesale gas and electricity prices into retail prices in 2022, energy inflation fell sharply throughout 
2023. A combination of factors weighed on energy inflation. Contract prices for gas and electricity are 
typically  based  on  formulae  that  use  the  future  gas  and  electricity  prices.  This  led  to  a  much  faster 
transmission  of  the  drop  in  wholesale  energy  prices  to  retail  prices  in  Belgium  than  the  euro  area 
average. This effect was reinforced by (i) the HICP inflation being calculated on the basis of the prices 
of new contracts; and (ii) the new HICP weights for 2023 reflecting a strong increase in the size of the 
energy  component,  which  amplified  the  effect  of  the  very  sizeable  drop  in  energy  prices  on  HICP 
inflation in 2023. 

The  second  indent  of  Article  140(1)  TFEU  defines  the  convergence  criterion  dealing  with  public 
finances  is  defined  in  the  as  ‘the  sustainability  of  the  government  financial  position;  this  will  be 

8   All forecasts for inflation and other variables in the current report are from the Commission’s Spring 2024 Economic Forecast. The 
forecasts are based on a set of common assumptions for external variables and on a ‘no policy change’ assumption, but also take 
into consideration measures that are known in sufficient detail. 

9   The respective 12-month average inflation rates were 2.5%, 2.6% and 2.6%. 
10   In May 2024, the 12-month average inflation rates of  Denmark, Finland and Belgium were 1.1%, 1.9% and 1.9% respectively and 

that of the euro area 3.4%. 

11   Statistics Finland, Adjustment of the price index of electricity in the releases of the Consumer Price Index and the Harmonised Index 

of Consumer Prices for August 2023, August 2023. See https://stat.fi/en/revisionrelease/clm92f0dg5s810avvk7mlerjj. 

3 

 
 
apparent from having achieved a government budgetary position without a deficit that is excessive as 
determined in accordance with Article 126(6)’.  

Furthermore, Article 2 of the Protocol on the convergence criteria states that this criterion means that 
‘at the time of the examination the Member State is not the subject of a Council decision under Article 
126(6) of the said Treaty that an excessive deficit exists’. 

The  TFEU  refers  to  the  exchange  rate  criterion  in  the  third  indent  of  Article  140(1)  as  ‘the 
observance  of  the  normal  fluctuation  margins  provided  for  by  the  exchange-rate  mechanism  of  the 
European Monetary System, for at least two years, without devaluing against the euro’. 

Article 3 of the Protocol on the convergence criteria provides that:  ‘The criterion on participation in the 
exchange rate mechanism of the European Monetary System […] shall mean that a Member State has 
respected  the  normal  fluctuation  margins  provided  for  by  the  exchange-rate  mechanism  of  the 
European  Monetary  System  without  severe  tensions  for  at  least  the  last  two  years  before  the 
examination.  In  particular,  the  Member  State  shall  not  have  devalued  its  currency’s  bilateral  central 
rate against the euro on its own initiative for the same period’12. 

The relevant 2-year period for assessing exchange rate stability in this report  ran from 19 June 2022 
to 18 June 2024. In its assessment of the exchange rate stability criterion, the Commission takes into 
account  developments  in  auxiliary  indicators  such  as  foreign  reserve  developments  and  short-term 
interest  rates.  It  also  takes  into  account  the  role  of  policy  measures  (including  foreign  exchange 
interventions) and international financial assistance  (wherever relevant) in maintaining exchange rate 
stability. One of the Member States with a derogation assessed in this report currently participates in 
the European exchange rate mechanism (ERM II) – Bulgaria. Entry into ERM II is decided upon request 
by a Member State and by the mutual agreement of all ERM II participants13. This report is not related 
to the ERM II entry process and does not assess any Member State’s capacity to join ERM II. 

The  fourth  indent  of  Article  140(1)  TFEU  requires  ‘the  durability  of  convergence  achieved  by  the 
Member  State  with  a  derogation  and  of  its  participation  in  the  exchange  rate  mechanism’  to  be 
‘reflected in the long-term interest rate levels’. 

Article  4  of  the  Protocol  on  the  convergence  criteria  further  states  that  ‘the  criterion  on  the 
convergence  of  interest  rates  […]  shall  mean  that,  observed  over  a  period  of  one  year  before  the 
examination, a Member State has had an average nominal long-term interest rate that does not exceed 
by more than 2 percentage points that of, at most, the three best-performing Member States in terms 
of  price  stability.  Interest  rates  shall  be  measured  on  the  basis  of  long-term  government  bonds  or 
comparable securities, taking into account differences in national definitions’. 

The interest rate reference value was calculated as 5.5% in May 202414. 

Article 140(1) TFEU also requires the reports to take account of  other factors relevant to economic 
integration and convergence. These include the integration of markets, the development of the balance 
of  payments  on  the  current  account  and  of  unit  labour  costs  and  other  price  indices.  The  latter  are 
covered within the assessment of price stability. The additional factors to be considered are important 
indicators of whether a Member State would integrate into the euro area without difficulties. They also 
broaden the view on the sustainability of convergence. 

The  assessment  of  the  degree  of  sustainable  convergence  for  the  Member  States with  a  derogation 
presented  in  this  report  draws  on  the  Commission’s  Spring  2024  Economic  Forecast  and  the  policy 
guidance provided under the European Semester. It is informed in particular by the fiscal surveillance 
carried out under the Stability and Growth Pact and the  Macroeconomic Imbalance Procedure. It also 
reflects  the  Commission’s  assessments  of  fiscal  sustainability  risks  and  of  the  national  fiscal 
frameworks, as well as the implementation of the recovery and resilience plans. 

12   In assessing compliance with the exchange rate criterion, the Commission examines whether the exchange rate has remained close 
to the ERM  II central  rate.  Reasons for an appreciation  may  be taken  into account,  in accordance  with  the Common  Statement on 
Acceding Countries and ERM2 by the Informal ECOFIN Council held in Athens on 5 April 2003. 

13   The ERM II participants are the euro-area finance ministries, the ECB, non-euro area ERM II finance ministries and central banks. 
14   The reference value for May 2024 was calculated as the simple average of the 12-month average of long-term interest rates of the 

Netherlands (2.8%), Italy (4.1%) and Latvia (3.7%), plus two percentage points. 

4 

 
 
 
2. 

BULGARIA 

In  the  light  of  its  assessment  on  legal  compatibility  and  on  the  fulfilment  of  the 
convergence  criteria,  and  taking  into  account  the  additional  relevant  factors,  the 
Commission  considers  that  Bulgaria  does  not  fulfil  the  conditions  for  the  adoption  of  the 
euro. 

Legislation  in  Bulgaria.  Subject  to  the  conditions  and  interpretations  set  out  in  Section  2.1  of  the 
Technical Annex, the Law on the Bulgarska Narodna Banka (BNB) can be considered compatible with 
the  relevant  provisions  of  EU  law  regarding  central  bank  independence,  the  prohibition  of  monetary 
financing  and  privileged  access,  and  central  bank  integration  into  the  ESCB  at  the  time  of  euro 
adoption with regard to the BNB’s objectives and the ESCB tasks laid down in Article 127(2) TFEU and 
Article 3 of the ESCB/ECB Statute. 

Bulgaria  does  not  fulfil  the  criterion  on  price  stability.  The  average  inflation  rate  in  Bulgaria 
during  the  12  months  to  May  2024  was  5.1%,  above  the  reference  value  of  4.1%.  The  Commission 
forecasts that  it  will  remain  slightly  above  the  reference  value  in  the  coming  months  but  the  gap  is 
projected to close by the end of 2024 or early 2025. 

Bulgaria’s annual HICP inflation rate averaged 13.0% in 2022 and decreased to 8.6% in 2023. Annual 
HICP  inflation  increased  from  12.1%  in  April  2022  to  15.6%  in  September  2022.  Headline  inflation 
then stabilised at 14.3% between November 2022 and January 2023, before slowing to 2.7% in May 
2024.  The  direct  contribution  of  energy  prices  to  headline  inflation  initially  surged  in  2022  but 
gradually  diminished  after  the  middle  of  the  year  and  turned  negative  as  of  April  2023.  The 
contributions  to  inflation  from  the  other  HICP  components  continued  to  grow  throughout  2022.  In 
2023,  the  deceleration  in  inflation  became  broad-based,  with  an  important  contribution  from  food 
prices. Services price inflation was  more persistent,  despite the lower inflation in transport, food and 
accommodation  services.  The  stronger  than  usual  tourism  season  in  the  summer  of  2023  also 
temporarily  held  back  disinflation  in  tourist  services.  The  annual  HICP  inflation  rates  in  Bulgaria  in 
2022 and 2023 were on average higher than those for the euro area as a whole. 

The  Commission’s  Spring  2024  Economic  Forecast  projects  that  average  annual  inflation  will  fall 
markedly from 8.6% in 2023 to 3.1% in 2024 and gradually ease further to 2.6% in 2025. Headline 
inflation is expected to come down because import prices are set to exert downward pressure on  the 
energy, food and non-energy industrial goods components. Services price inflation is also projected to 
slow,  driven  by  second-round  effects  from  lower  input  prices  and  a  projected  moderation  in  wage 
growth.  The  relatively  low  price  level  in  Bulgaria  (about  55%  of  the  euro  area  average  in  2022) 
suggests potential for price level convergence in the long term. 

Bulgaria fulfils the criterion on public finances. Bulgaria is not the subject of a Council Decision 
on the existence of an excessive deficit. The general government  deficit  narrowed  by 1.1  percentage 

5 

 
 
 
points to 2.9% of GDP in 2022 and narrowed further to 1.9% of GDP in 2023. In 2022, the government 
introduced  a  set  of  measures  to  reduce  the  deficit,  including  a  gradual  increase  in  excise  duty  on 
tobacco and toll taxes. It also adopted expenditure-increasing measures with effects to be felt in the 
next  fiscal  year,  including  increases  in  the  minimum  wage  and  changes  to  the  pension  policy 
parameters.  Furthermore,  some  key  COVID-19  support  measures,  the  support  provided  to  Ukrainian 
refugees  and  measures  to  mitigate  the  impact  of  high  energy  prices  weighed  on  the  government 
balance in 2022. In 2023, increases in wages and pensions that had been legislated in 2022 began to 
have  a  budgetary  impact  that  was  mitigated  by  measures  to  increase  revenue  collection  and  the 
phasing-out  of  previous  energy-related  support  measures.  The  Commission’s  Spring  2024  Economic 
Forecast expects the general government balance to deteriorate to -2.8% of GDP in 2024 and to reach 
-2.9%  of  GDP  in  2025  under  a  ‘no  policy  change’  assumption.  The  government  debt-to-GDP  ratio 
increased  from  22.6%  in  2022  to  23.1%  in  2023,  and  is  expected  to  increase  further  to  24.8%  in 
2024, before falling slightly to 24.6% in 2025. Despite the low projected debt level by 2034 (41% of 
GDP), Bulgaria’s debt sustainability risks appear medium in the medium term. However, the projection 
is subject to considerable uncertainty. Bulgaria has the key elements of a robust fiscal framework, but 
some difficulties in implementation remain. Bulgaria has a complex system of national fiscal rules in 
place  and  there  is  scope  to  improve  key  dimensions,  including  the  narrow  mandate  of  the  Fiscal 
Council.  

Bulgaria  fulfils  the  exchange  rate  criterion.  Bulgaria  entered  ERM  II  on  10  July  2020  and  had 
been participating in the mechanism for almost 4 years at the time of the adoption of this report. The 
Bulgarian  lev  observes  a  central  rate  of  1.95583  to  the  euro  with  a  standard  fluctuation  band  of 
±15%. The Bulgarian National Bank pursues its primary objective of price stability through an exchange 
rate  anchor  as  part  of  a  currency  board  framework.  Bulgaria  introduced  its  currency  board  in  1997, 
pegging the Bulgarian lev to the German mark at first and later to the euro. Bulgaria joined ERM II with 
its  existing  currency  board  framework  in  place,  as  a  unilateral  commitment,  thereby  placing  no 
additional obligations on the ECB. The lev exchange rate remained at the ERM II central rate for the 2 
years  covered  by  the  assessment  without  any  signs  of  tensions  or  devaluation  against  the  euro. 
Additional indicators, such as developments in foreign exchange reserves and short-term interest rates, 
suggest  that  investors’  risk  perception  towards  Bulgaria  has  remained  favourable.  The  (negative) 
spread of the Bulgarian benchmark short-term interest rate (i.e. the 3-month base interest rate (BIR) to 
the Euribor) widened throughout 2022. It then narrowed from -30 basis points in December 2022 to 1 
basis  point  in  April  2024.  A  sizeable  buffer  of  official  reserves  continues  to  underpin  the  currency 
board arrangement’s resilience. Upon its ERM II entry, Bulgaria committed to implement a set of policy 
measures  (known  as  post-entry  commitments)  to  ensure  that  its  participation  in  the  mechanism  is 
sustainable  and  that  Bulgaria  achieves  a  high  degree  of  economic  convergence  before  adopting  the 
euro.  The  measures  cover  four  policy  areas:  (i)  the  non-banking  financial  sector;  (ii)  the  insolvency 
framework; (iii) the anti-money laundering framework; and (iv) governance of state-owned enterprises.  

Bulgaria  fulfils  the  criterion  on  the  convergence  of  long-term  interest  rates.  The  average 
long-term interest rate in the 12-months to May 2024 was 4.0%, below the reference value of 5.5%. 
From  a  low  rate  at  the  beginning  of  2022,  the  Bulgarian  long-term  interest  rate  has  since  been 
increasing step by step. It increased in the first months of 2022 before remaining within a narrow band 

6 

 
 
of 1.6-1.9%, from April 2022 to January 2023. It then increased again substantially in the following 2 
months.  However,  between  March  2023  and  December  2023,  the  interest  rate  remained  in  a  very 
narrow  band of 4.0-4.2%. The yield spread  vis-à-vis the  German  benchmark  bond stayed in the 0.4-
0.9% range from the beginning of  2022 to February 2023 before increasing to a  range of  1.2-1.9% 
between March 2023 and May 2024. 

The Commission has also examined additional factors, including balance of payments developments, 
the integration of markets and the institutional environment. Bulgaria’s external balance (the combined 
current  and  capital  account)  improved  to  -0.5%  of  GDP  in  2022  and  further  to  1.3%  in  2023.  The 
Bulgarian  economy  is  well-integrated  with  the  euro  area  through  trade  and  investment  linkages. 
Selected  indicators  related  to  the  institutional  environment  show  that  Bulgaria  performs  worse  than 
many  euro  area  Member  States.  In  particular,  challenges  relate  to  the  rule  of  law,  corruption  and 
government effectiveness. However, in the context of its participation in the ERM II and in accordance 
with  its  recovery  and  resilience  plan  (RRP),  Bulgaria  is  taking  measures  to  improve  its  institutional 
framework and the business environment, including in the four areas covered by the post-entry ERM II 
commitments. The financial sector in Bulgaria is smaller and less developed than in the euro area. It is 
dominated  by  the  banking  sector  which  is  well-integrated  into  the  euro  area’s  financial  sector 
(particularly  through  a  high  level  of  foreign  ownership).  The  underdevelopment  of  market-based 
financing  is  reflected  in  the  very  small  markets  for  equity  and  private  sector  debt.  Continued  policy 
action  and  a  favourable  macroeconomic  environment  have  reduced  risks  and  vulnerabilities  to  the 
financial sector. In the context of the Macroeconomic Imbalance Procedure, the Commission concluded 
in its Alert Mechanism Report for 2024 that it was not necessary to carry out an in-depth analysis for 
Bulgaria. 

Bulgaria’s  recovery  and  resilience  plan  (RRP)  includes  measures  to  address  a  series  of  structural 
challenges,  in  synergy  with  other  EU  funds,  including  cohesion  policy  funds,  to  boost  its 
competitiveness  and  stimulate  sustainable  growth,  and  reduce  the  country’s  territorial  and  social 
disparities. The RRF funding provides Bulgaria with EUR 5.7 billion in grants over the 2021-2026 period. 
Bulgaria has submitted two payment requests resulting in an overall disbursement of EUR 1.37 billion 
on 16 December 2022. The implementation of the Bulgarian RRP faces significant delays. Bulgaria has 
yet to implement major reforms and investments for the decarbonisation of the energy sector, as well 
as key business environment reforms in the areas of rule of law, anti-corruption, governance of state-
owned enterprises and public procurement.   

In addition, cohesion policy provides Bulgaria with EUR 10.7 billion for the 2021-2027 period. Cohesion 
policy  financing  aims  particularly  to  further  support  Bulgaria’s  competitiveness,  green  transition, 
including  energy  independence,  the  just  transition  and  climate  change  resilience,  as  well  as  upward 
social  convergence,  including  by  addressing  labour  shortages,  further  developing  educational  and 
training  systems  and  making  them  more  inclusive  for  disadvantaged  groups.  Bulgaria  has  made 
progress in implementing cohesion policy but challenges remain. 

3. 

CZECHIA 

In  the  light  of  its  assessment  on  legal  compatibility  and  on  the  fulfilment  of  the 
convergence  criteria,  and  taking  into  account  the  additional  relevant  factors,  the 
Commission  considers  that  Czechia  does  not  fulfil  the  conditions  for  the  adoption  of  the 
euro. 

Legislation in Czechia – in particular the Czech National Council Act No. 6/1993 Coll. on the Česká 
národní banka (the ČNB Law)  – is not fully compatible with the requirements of Article 131 TFEU. 
Incompatibilities  concern  the  independence  of  the  central  bank  and  central  bank  integration  into  the 
ESCB at the time of euro adoption with regard to the ČNB's objectives and the ESCB tasks laid down in 
Article  127(2)  TFEU  and  Article  3  of  the  ESCB/ECB  Statute.  In  addition,  the  ČNB  Law  also  contains 
imperfections relating to the prohibition of monetary financing and the ESCB tasks. 

Czechia  does  not  fulfil  the  criterion  on  price  stability.  The  average  inflation  rate  in  Czechia 
during the 12 months to May 2024 was 6.3%, well above the reference value of 4.1%. It is projected 
to be below the reference value in the coming months. 

7 

 
 
Annual  HICP  inflation  in  Czechia  averaged  12.0%  in  2023,  down  from  14.8%  in  2022.  The  high 
inflation  rates  in  2022  and  2023  were  primarily  the  result  of  the  growth  in  energy  and food  prices, 
triggered  by  Russia’s  full-scale  invasion  of  Ukraine  and  supply  bottlenecks.  Annual  HICP  inflation 
peaked at 19.1% in January 2023 and gradually decreased throughout the rest of the year, due to the 
stabilisation of energy and food prices in the second half of 2023. The high commodity prices also had 
spill-over  effects  on  other  categories  of  HICP  inflation,  which  also  registered  high  growth  rates. 
Headline  inflation  decreased  to  7.6%  in  December  2023  and  continued  to  decrease  in  the  first  5 
months of 2024, reaching 2.8% in May 2024. Czechia’s annual HICP inflation rates in 2022 and 2023 
were on average higher than those for the euro area as a whole.  

The  Commission’s  Spring  2024  Economic  Forecast  projects  that  average  annual  HICP  inflation  will 
decrease  to  2.5%  in  2024  and  to  2.2%  in  2025.  The  significant  projected  decrease  compared  with 
2022 and 2023 is attributed to declining  wholesale prices of energy and food combined with a  very 
modest recovery in internal demand. The relatively low price level in Czechia (about 80% of the euro 
area average in  2022) suggests that there is still potential for further price level convergence in the 
long term. 

The  Commission  report  under  Article  126(3)  concludes  that  Czechia  fulfils  the  deficit 
criterion of the Stability  and Growth Pact. On  19 June 2024, the Commission adopted a report 
under  Article  126(3)  of  the  TFEU.  The  report  assessed  the  budgetary  situation  of  Czechia,  as  its 
government deficit in 2023 exceeded the Treaty reference value of 3% of GDP. The report concluded 
that the deficit criterion of the Stability and Growth Pact is fulfilled by Czechia, taking into account the 
relevant  factors  brought  forward  by  Czechia.  While  its  general  government  deficit  in  2023  exceeded 
and  was  not  close  to  the  Treaty  reference  value  of  3%  of  GDP,  and  the  excess  over  the  Treaty 
reference value is not considered to be exceptional, Czechia took consolidation measures in 2024 that 
should  translate  into  a  year-on-year  reduction  in  the  deficit  to  well  below  3%  of  GDP  in  2024.  The 
Commission  concluded  that  it  would  not  propose  the  opening  of  the  excessive  deficit  procedure.  The 
general government deficit was 3.2% of GDP in 2022 and 3.7% of GDP in 2023, above the 3% of GDP 
Treaty  reference  value.  The  Commission’s  Spring  2024  Economic  Forecast  projects  that  the  general 
government  deficit  will  decrease  to  2.4%  of  GDP  in  2024,  mainly  reflecting  the  discontinuation  of 
emergency energy support measures. It also forecasts a decrease to 1.9% of GDP in 2025, under a ‘no 
policy change’ assumption. The government debt-to-GDP ratio decreased from around 44.2% in 2022 
to  44.0%  in  2023,  but  is  forecast  to  increase  to  45.2%  in  2024  and  45.5%  in  2025.  Czechia’s  debt 
sustainability  risks  appear  medium  over  the  medium  term.  Government  debt  is  projected  to  slightly 
increase from around 45% of GDP in 2024 to around 48% in 2034.  

8 

 
 
Czechia  does  not  fulfil  the  exchange  rate  criterion.  The  Czech  koruna  does  not  participate  in 
ERM II.  Since  the  late  1990s,  the  ČNB  has  been  operating  an  explicit  inflation  targeting  framework 
combined with a floating exchange rate regime that allows for foreign exchange market interventions 
by  the  central  bank.  Following  a  period  of  relative  stability  in  2018-2019,  the  Czech  koruna  has 
experienced significant volatility since the COVID-19 pandemic. It depreciated significantly in 2020, due 
to  an  economic  downturn  that  was  more  pronounced  than  expected.  This  was  then  followed  by  a 
moderate  appreciation  trend  up  to  early  2022.  Depreciation  pressures  following  Russia’s  full-scale 
invasion  of  Ukraine  triggered  stabilising  interventions  by  the  ČNB  on  the  foreign  exchange  market 
between  May and October 2022. The koruna  then  resumed its  previous appreciation  trend until April 
2023,  after  which  it  depreciated  back  to  close  to  pre-pandemic  levels,  on  account  of  market 
expectations of a  cut in interest rates. In May 2024, the koruna was  about 0.3% weaker against the 
euro  than  it  had  been  2  years  earlier.  Short-term  interest  rate  differentials  vis-à-vis  the  euro  area 
increased significantly throughout 2022, reaching 720 basis points in July 2022, reflecting the ČNB’s 
early monetary policy tightening in response to high inflation levels and the currency depreciation. The 
short-term spread fell considerably in 2023 and early 2024, and stood at around  140 basis points in 
May 2024. 

Czechia fulfils the criterion on the convergence of long-term interest rates. The average long-
term interest rate in the 12 months to May 2024 was 4.2%, below the reference value of  5.5%. The 
long-term  interest  rate  of  Czechia  increased  in  the  first  half  of  2022  and  peaked  at  5.1%  in  June 
2022.  It  then  decreased  gradually  to  4%  in  December  2023  as  inflation  fell  rapidly.  The  long-term 
interest  rate  reached  4.2%  in  May  2024,  with  the  spread  vis-à-vis  the  German  benchmark  bond 
nearing 164 basis points. 

The Commission has also examined additional factors, including balance of payments developments, 
the integration of markets and the institutional environment. Czechia’s external balance (the combined 
current and capital account) recorded a surplus of 0.5% of GDP in 2023. The Czech economy is highly 
integrated with the euro area through trade and investment linkages. Selected indicators related to the 
institutional  environment  show  that  Czechia  ranks  higher  than  the  average  of  the  five  euro  area 
Member  States with  the  lowest  scores, in  particular in  relation  to  indicators  that  measure  regulatory 
quality,  the  rule  of  law,  control  of  corruption,  government  effectiveness,  and  political  stability  and 
absence of violence. The financial sector in Czechia is smaller and less developed than in the euro area. 
Market based financing is less developed, which is reflected in the very small markets for equity and 
private sector debt. The Czech banking sector is highly integrated into the euro area’s financial system, 
in particular through a high degree of foreign ownership of banks. In the context of the Macroeconomic 
Imbalance  Procedure,  the  Commission  concluded  in  its  Alert  Mechanism  Report  for  2024  that  it  was 
not necessary to carry out In-Depth Review analysis for Czechia.  

Czechia’s  recovery  and  resilience  plan  (RRP)  includes  measures  to  address  a  series  of  structural 
challenges,  in  synergy  with  other  EU  funds,  including  cohesion  policy  funds,  to  boost  its 
competitiveness  and  stimulate  sustainable  growth,  and  reduce  the  country’s  territorial  and  social 
disparities.  The  RRF  funding  provides  Czechia  with  EUR 8.4  billion  in  grants  and  EUR  818  million  in 
loans over the 2021-2026 period. Czechia has submitted two payment requests resulting in an overall 

9 

 
 
disbursement of EUR 2.69 billion on 2 April 2024. To deliver on the commitments of the plan by August 
2026, it is essential for Czechia to address emerging delays while strengthening absorption capacity. 
The  absorption  capacity  is  constrained  by  limitations  of  administrative  capacity  at  some  of  the 
implementing bodies and is particularly visible in areas that require more expertise, such as the digital 
and green transition.   

In addition, cohesion policy provides Czechia with EUR 21.1 billion for the 2021-2027 period. Cohesion 
policy  financing  aims  particularly  to  further  support  Czechia’s  competitiveness,  by  facilitating  the 
adaptation to the digital era and to the green transition, including energy efficiency, renewable energy 
and just transition and by helping workers and businesses to adapt to change. 

4. 

HUNGARY 

In  the  light  of  its  assessment  on  legal  compatibility  and  on  the  fulfilment  of  the 
convergence  criteria,  and  taking  into  account  the  additional  relevant  factors,  the 
Commission  considers  that  Hungary  does  not  fulfil  the  conditions  for  the  adoption  of  the 
euro. 

Legislation in Hungary - in particular the Law on the Magyar Nemzeti Bank (the MNB Law) - is not 
fully  compatible  with  the  requirements  of  Article  131  TFEU.  Incompatibilities  notably  concern  the 
independence of the MNB, the prohibition of monetary financing and central bank integration into the 
ESCB at the time of euro adoption with regard to the ESCB tasks laid down in Article 127(2) TFEU and 
Article 3 of the ESCB/ECB Statute. In addition, the MNB Law also contains further imperfections relating 
to central bank independence and the MNB’s integration into the ESCB. 

Hungary  does  not  fulfil  the  criterion  on  price  stability.  The  average  inflation  rate  in  Hungary 
during the 12 months to May 2024 was 8.4%, well above the reference value of 4.1%. It is projected 
to remain above the reference value in the coming months. 

Annual  HICP  inflation  in  Hungary  surged  in  2022  and  2023  to  15.3%  and  17.0%  respectively.  In 
particular,  annual  HICP  inflation  rose  from  10.9%  in  May  2022  to  26.2%  in  January  2023.  It  then  
quickly fell to 3.7% in January 2024. The rise in inflation in 2022 was mostly driven by developments 
in energy and food commodity prices, a depreciation of the forint and strong demand  until mid-2022. 
Government  interventions  in  consumer  prices  of  energy  and  certain  food  items  also  significantly 
affected  the  profile  of  inflation.  Inflation  stood  at  3.9%  in  May  2024.  Annual  HICP  inflation  rates  in 
Hungary in 2022 and 2023 were on average higher than those for the euro area as a whole. 

The Commission’s Spring 2024 Economic Forecast expects annual HICP inflation to decrease to 4.1% in 
2024  and  to  slow  to  3.7%  in  2025,  as  the  transmission  of  commodity  price  increases  to  consumer 
prices is completed. The relatively low price level in Hungary (about  64% of the euro area average in 
2022) suggests that there is potential for further price level convergence in the long term. 

10 

 
 
 
The Commission report under Article 126(3) concludes that, after considering the opinion of 
the  Economic  and  Financial  Committee,  the  Commission  intends  to  propose  to  open  an 
excessive  deficit  procedure  for  Hungary,  by  proposing  to  the  Council  to  adopt  a  Decision 
under Article 126(6) establishing the existence of an excessive deficit. On 19 June 2024, the 
Commission  adopted  a  report  under  Article  126(3)  of  the  TFEU.  The  report  assessed  the  budgetary 
situation of Hungary, as its government deficit in 2023 exceeded the Treaty reference value of 3% of 
GDP. The report concluded that the general government deficit in 2023 exceeded and was not close to 
the  Treaty  reference  value  of  3%  of  GDP.  The  excess  over  the  Treaty  reference  value  was  not 
considered to be exceptional and was not expected to be temporary. The  general  government  deficit 
was 6.2% of GDP in 2022 and 6.7% of GDP in 2023, above the Treaty reference value of 3% of GDP. 
The  Commission’s  Spring  2024  Economic  Forecast  projects  that  the  general  government  deficit  will 
decrease  to  5.4%  of  GDP  in  2024,  reflecting  the  robust  growth  in  tax  revenue,  lower  projected 
subsidies to utility companies and a decrease in public investment. It is forecast to further decrease to 
4.5%  of  GDP  in  2025,  under  a  ‘no  policy  change’  assumption.  The  government  debt-to-GDP  ratio 
decreased from around 74.1% in 2022 to 73.5% in 2023. It is forecast to increase to 74.3% in 2024 
but then fall back to 73.8% in 2025. Hungary’s debt sustainability risks appear medium in the medium 
term. Government debt is projected to slightly increase from around 74% in 2024 to around 78% of 
GDP  in  2034.  Hungary’s  fiscal  framework  has  gradually  become  more  compliant  with  EU  legal 
requirements, but it has not fostered transparency and a prudent fiscal stance. The country’s medium-
term budgetary framework could be more binding on the national budgets, and the role of the Fiscal 
Council of Hungary could be strengthened. 

Hungary does not fulfil the exchange rate criterion. The Hungarian forint does not participate in 
ERM  II.  Hungary  operates  a  floating  exchange  rate  regime  that  allows  foreign  exchange  market 
interventions by the central bank. Overall, the forint depreciated against the euro in 2022 and 2023 in 
a context of large exchange rate fluctuations. Russia’s full-scale invasion of Ukraine triggered a strong 
depreciation phase, which was followed by a partial recovery after the end of 2022. The forint started 
depreciating again in the second half of 2023. In May 2024, the forint was about 0.7% weaker against 
the  euro  than  2  years  earlier.  Short-term  interest  rate  differentials vis-à-vis the  euro  area  increased 
substantially  throughout  2022  reaching  1400  basis  points  as  monetary  policy  reacted  to  surging 
inflation  levels  and  currency  depreciation  much  more  strongly  than  in  the  euro  area.  The  short-term 
spread fell considerably in 2023 and early 2024 but remained large at 343 basis points in May 2024. 

Hungary  does  not  fulfil  the  criterion  on  the  convergence  of  long-term  interest  rates.  The 
average long-term interest rate in the 12 months to May 2024 was 6.8%, above the reference value of 
5.5%.  The  long-term  interest  rate  in  Hungary  rose  steeply  in  2022  reflecting  rapidly  rising  inflation, 
monetary policy tightening and heightened risk aversion due to Russia’s full-scale invasion of Ukraine. 
It  peaked  at  10.2%  in  October  2022  but  then  started  declining  on  the  back  of  falling  inflation  and 
monetary  easing.  The  long-term  interest  rate  spread  vis-à-vis  the  German  benchmark  bond  widened 
substantially  in  2022  and  peaked  at  around  800  basis  points  in  October,  reflecting  markedly  higher 
inflation  and  central  bank  policy  rates  in  Hungary  as  well  as  higher  sovereign  risk  in  a  context  of 
emerging macroeconomic imbalances, as evidenced by a widening of credit default swaps spreads. As 
inflation  fell  rapidly  and  began  converging  with  that  of  the  euro  area,  the  long-term  interest  rate 

11 

 
 
spread decreased substantially on the back of monetary easing in 2023. Hungary’s long-term interest 
rate increased in the first 5 months of 2024, reaching 6.8%  in May 2024. The long-term spread vis-à-
vis  the  German  benchmark  bond  was  427  basis  points  that  month,  down  from  806  basis  points  in 
October 2022.  

The Commission has also examined additional factors, including balance of payments developments, 
the  integration  of  markets  and  the  institutional  environment.  The  external  balance  improved 
substantially  from  -6.2%  of  GDP  in  2022  to  1.2%  in  2023  as  domestic  demand  and  energy  prices 
declined. The Hungarian economy is highly integrated with the euro area through trade and investment 
linkages.  Selected  indicators  relating  to  the  institutional  environment,  show  that  Hungary  performs 
worse than many euro area  Member States, in particular in relation to  indicators that measure voice 
and accountability, regulatory  quality  and  control  of  corruption.  It  also  performs  lower than  the  euro 
area average in terms of government effectiveness and the rule of law. Hungary’s financial system is 
characterised by a large presence of foreign holdings that do not perform any financial intermediation 
in  the  domestic  economy.  Excluding  these,  Hungary’s  financial  system  is  less  developed  than  in  the 
euro  area.  Hungary’s  banking  sector  represents  a  large  and  relatively  stable  share  of  the  financial 
sector and  is  well-integrated  into  the  euro  area’s  financial  system  due  to  a  relatively  large  share  of 
foreign ownership. The equity and debt markets are small and relatively less developed. In the context 
of the Macroeconomic Imbalance Procedure, the Commission concluded in its Alert Mechanism Report 
for  2024  that  an  In-Depth  Review  was  warranted  for  Hungary.  The  latter  concluded  that  Hungary  is 
experiencing  macroeconomic  imbalances.  Vulnerabilities  relate  to  strong  price  and  cost  pressures, 
government and external financing needs, and house prices. 

Hungary’s  recovery  and  resilience  plan  (RRP)  includes  measures  to  address  a  series  of  structural 
challenges,  in  synergy  with  other  EU  funds,  including  cohesion  policy  funds,  to  boost  its 
competitiveness  and  stimulate  sustainable  growth,  and  reduce  the  country’s  territorial  and  social 
disparities.  The  RRF  funding  provides  Hungary  with  EUR 10.4  billion over  the  2021-2026  period.  The 
implementation  of  the  Hungarian  RRP  faces  significant  delays.  Hungary  has  not  submitted  any 
payment  requests  so  far.  Structural  challenges  linked  to  implementing  the  necessary  measures  to 
ensure  the  protection  of  the  EU’s  financial  interests  call  for  swift  action  to  ensure  that  reforms  and 
investments can be completed on time.   

In addition, cohesion policy provides Hungary with EUR 21.7 billion for the 2021-2027 period. Cohesion 
policy  financing  aims  to  further  support  Hungary’s  competitiveness,  including  innovation  and  the 
uptake  of  advanced  technologies,  green  transition,  and  upward  social  convergence,  including  by 
addressing poverty and developing education systems and skills. While Hungary has made progress in 
implementing cohesion policy, challenges remain and significant social and regional disparities persist. 

5. 

POLAND  

In light of  its assessment on legal compatibility and on the fulfilment of the convergence 
criteria, and taking into account the additional relevant factors, the Commission considers 
that Poland does not fulfil the conditions for the adoption of the euro. 

Legislation  in  Poland  -  in  particular  the  Act  on  the  Narodowy  Bank  Polski  (the  NBP  Act)  and  the 
Constitution of the Republic of Poland - is not fully compatible with the requirements of Article 131 
TFEU.  Incompatibilities  concern  the  independence  of  the  central  bank,  the  prohibition  of  monetary 
financing and central bank integration into the ESCB at the time of euro adoption. In addition, the  NBP 
Act  also  contains  some  imperfections  relating  to  central  bank  independence  and the  NBP  integration 
into the ESCB at the time of euro adoption with regard to the NBP’s objectives and the ESCB tasks laid 
down in Article 127(2) TFEU and Article 3 of the ESCB/ECB Statute. 

Poland does not fulfil the criterion on price stability. The average inflation rate in Poland during 
the  12  months  to  May  2024  was  6.1%,  well  above  the  reference  value  of  4.1%.  It  is  projected  to 
remain above the reference value in the coming months. 

Poland recorded a significant and broad-based increase in annual HICP inflation in 2022 followed by 
rapid disinflation in the second half of 2023. Overall, headline inflation averaged 13.2% in 2022 and 
10.9% in 2023. In 2022, inflation was driven by rising energy and food prices as well as accelerating 
HICP  inflation  excluding  energy  and  food.  Consumer  energy  and  food  prices  increased  in  spite  of 

12 

 
 
sizeable  government  measures  aimed  at  curbing  energy  price  increases  and  a  reduction  of  VAT  on 
some  food  products  (both  were  introduced  at  the  beginning  of  the  year).  Annual  inflation  peaked  in 
February 2023 at 17.2% and gradually fell to 6.2% by the end of 2023 on the back of an easing of 
energy and food price pressures. It continued to decelerate in the first 3 months of 2024 but expiration 
of the zero VAT rate on food increased HICP inflation in April. In 2022 and 2023, annual HICP inflation 
in Poland was persistently higher than in the euro area. 

The  Commission’s  Spring  2024  Economic  Forecast  projects  that  annual  HICP  inflation  will  average 
4.3% in 2024 and 4.2% in 2025. Disinflation is projected to continue but inflation will remain high due 
to a gradual unfreezing of energy prices (it is assumed that global energy prices will weaken further). 
Monetary policy easing in September and October 2023 is set to affect inflation with a delay and may 
prop up price growth in 2024-25. The inflation outlook remains uncertain due to downside risks from 
weaker than projected domestic demand and, on the upside, a tight labour market. The relatively low 
price level in Poland (about  57% of the euro area average in 2022) suggests potential for price level 
convergence in the long term. 

The Commission report under Article 126(3) concludes that, after considering the opinion of 
the  Economic  and  Financial  Committee,  the  Commission  intends  to  propose  to  open  an 
excessive  deficit  procedure  for  Poland,  by  proposing  to  the  Council  to  adopt  a  Decision 
under Article 126(6) establishing the existence of an excessive deficit. On 19 June 2024, the 
Commission  adopted  a  report  under  Article  126(3)  of  the  TFEU.  The  report  assessed  the  budgetary 
situation of Poland, as its government  deficit in 2023 exceeded the Treaty reference value of 3% of 
GDP.  The  report  concluded  that  the  general  government  deficit  in  2023  exceeded  and  was  not  close 
the  Treaty  reference  value  of  3%  of  GDP.  The  excess  over  the  Treaty  reference  value  was  not 
considered to be exceptional and  was not expected to be temporary.  The general government  deficit 
increased  to  3.4%  of  GDP  in  2022  and  further  to  5.1%  in  2023.  The  Commission’s  Spring  2024 
Economic Forecast projects that the general government deficit will increase to 5.4% of GDP in 2024 
(reflecting  high  spending  on  defence,  salary  increases  in  the  public  sector  and  new  social  benefits) 
before falling back to 4.6% of GDP in 2025. The government debt-to-GDP ratio increased from 49.2% 
in  2022  to  49.6%  in  2023  and  is  expected  to  increase  further  still  to  53.7%  in  2024  and  57.7%  in 
2025.  Poland’s  debt  sustainability  risks  appear  medium  over  the  medium  run.  Government  debt  is 
projected  to  increase  steadily  from around  54%  in  2024  to  around  85%  of  GDP  in  2034.  The  fiscal 
framework  in  Poland  is  strong  overall  and  the  numerical  fiscal  rules  are  at  the  centre  of  the 
framework. 

13 

 
 
Poland does not fulfil the exchange rate criterion. The Polish zloty does not participate in ERM II. 
Poland  operates  a  free-floating  exchange  rate  regime  that  allows  foreign  exchange  market 
interventions by the central bank. Throughout 2022, the zloty continued to trade against the euro at its 
weakest levels in almost two decades in the context of heightened risk aversion due to Russia’s full-
scale of invasion of Ukraine. This was followed by a period of broad appreciation in 2023 that reflected 
increased investor confidence. In the first 5  months of 2024, the exchange rate  stabilised at around 
4.30 PLN/EUR, which was similar to its  pre-pandemic levels. In  May 2024, the zloty  was about  8.6% 
stronger against the euro than 2 years earlier. The short-term interest rate differential with the euro 
area surged in 2022, due to the NBP’s early and strong tightening cycle. It peaked at around 710 basis 
points in June 2022 before narrowing again as the ECB started its own tightening cycle. In 2023, the 
euro  area  3-month  rate  continued  to  rise,  while  the  Polish  3-month  rate  stabilised,  contributing  to 
further spread decreases. After the NBP’s policy rate cuts in September and October 2023, the interest 
rate  differential  stabilised  at  around  190  basis  points.  The  spread  increased  to  slightly  above  200 
basis points in May 2024. 

Poland  does  not  fulfil  the  criterion  on  the  convergence  of  long-term  interest  rates.  The 
average long-term interest rate in the 12 months to May 2024 was 5.6%, slightly above the reference 
value of 5.5%. The long-term interest rate of Poland continued its upward trend in  2022, peaking at 
7.8% in October – the highest level since 2002. This reflected monetary policy rate increases, strong 
inflationary pressures and heightened risk aversion due to Russia’s full-scale invasion of Ukraine. Over 
that  period,  the  long-term  interest  rate  spread  vis-à-vis  the  German  benchmark  bond  repeatedly 
reached record levels, albeit with strong fluctuations. October 2022 saw a turning point that coincided 
with the end of NBP’s hiking cycle, after which the long-term interest rate entered a period of gradual 
decrease,  reaching  5.7%  in  May  2024.  The  spread  vis-à-vis  the  German  benchmark  bond  narrowed 
from its peak of around 570 basis points in June 2022 to about 315 basis points in May 2024. 

The Commission has also examined additional factors, including balance of payments developments, 
the integration of markets and the institutional environment. Poland’s external balance (the combined 
current  and  capital  account)  was  volatile  in  2022-2023,  including  due  to  fluctuations  in  commodity 
prices. The 2022 deficit (-1.9% of GDP) became a surplus in 2023 (1.8% of GDP). The Polish economy 
is  well-integrated  with  the  euro  area  through  trade  and  investment  linkages.  Selected  indicators 
relating  to  the  institutional  environment  show  that  Poland  performed  worse  than  many  euro  area 
Member States, in particular in relation to indicators that measure voice and accountability, as well as 
government effectiveness. The financial sector in Poland is smaller and less developed than in the euro 
area. It is highly dominated by banks, which are well integrated into the euro area’s financial system 
through  a  high  level  of  foreign  ownership.  Market-based  financing  is  less  developed  and  this  is 
reflected  in  the  very  small  markets  for  equity  and  private  sector  debt.  In  the  context  of  the 
Macroeconomic  Imbalance  Procedure,  the  Commission  concluded  in  its  Alert  Mechanism  Report  for 
2024 that it was not necessary to carry out In-Depth Review analysis for Poland. 

The implementation of Poland’s recovery and resilience plan is underway, however timely completion 
requires increased efforts. Poland has submitted one payment request, corresponding to 38 milestones 
and  targets  in  the  plan  and  resulting  in  a  disbursement  of  EUR  6.3  billion  on  15  April  2024.  The 

14 

 
 
Commission has so far disbursed a total of EUR 11.4 billion to Poland, of which EUR 8.1 billion in loans, 
including  EUR  5.1  billion  of  pre-financing  payments.  The  implementation  of  the  Polish  RRP  faces 
emerging delays. The size and complexity of the plan, and challenges linked to absorption capacity, call 
for  accelerating  investments  and  addressing  emerging  delays  while  strengthening  administrative 
capacities to ensure that reforms and investments can be completed on time. While Poland is taking 
some measures to address the lack of administrative capacity, challenges remain in particular in terms 
of finishing the largest investments within the lifetime of the RRF.  

In addition, cohesion policy provides Poland with EUR 75.5 billion for the 2021-2027 period. Cohesion 
policy  financing  aims  particularly  to  further  support  Poland’s  competitiveness  by  boosting  R&D 
investment and high-tech exports, digitalisation, the green and just transition and the  development of 
skills  and  public  services,  including  access  to  formal  childcare  for  children  under  three  years  of  age. 
Poland  has  made  progress  in  implementing  cohesion  policy  but  challenges  remain  and  regional 
disparities between eastern regions and the rest of the country have continuously widened. 

6. 

ROMANIA 

In  the  light  of  its  assessment  on  legal  compatibility  and  on  the  fulfilment  of  the 
convergence  criteria,  and  taking  into  account  the  additional  relevant  factors,  the 
Commission  considers  that  Romania  does  not  fulfil  the  conditions  for  the  adoption  of  the 
euro. 

Legislation  in  Romania  –  in  particular  Law  No.  312  on  the  Statute  of  the  Bank  of  Romania  of  28 
June  2004  (the  BNR  Law)  –  is  not  fully  compatible  with  the  requirements  of  Article  131  TFEU. 
Incompatibilities concern the independence of the central bank, the prohibition of monetary financing 
and  central  bank  integration  into  the  ESCB  at  the  time  of  euro  adoption.  In  addition,  the  BNR  Law 
contains  imperfections  relating  to  central  bank  independence  and  to  central  bank  integration  in  the 
ESCB at the time of euro adoption with regard to the BNR’s objectives and the ESCB tasks laid down in 
Article 127(2) TFEU and Article 3 of the ESCB/ECB Statute. 

Romania  does  not  fulfil  the  criterion  on  price  stability.  The  average  inflation  rate  in  Romania 
during the 12 months to May 2024 was 7.6%, well above the reference value of 4.1%. It is projected 
that it will remain well above the reference value in the coming months. 

Annual  HICP  inflation  in  Romania  averaged  9.7%  in  2023,  down  from  12%  in  2022.  During  2022, 
annual  HICP  inflation  accelerated,  as  the  sharp  rise  in  oil,  gas  and  food  commodity  prices  in  global 
markets  was  passed  on  to  the  domestic  industry  and  to  retail  food  and  energy  prices.  The  annual 
inflation  rate  peaked  at  14.6%  in  November  2022.  It  has  since  decelerated,  reflecting  the  decline  in 
energy prices and a tighter monetary policy stance and financial conditions. Headline inflation returned 
to  single-digits  by  mid-2023  and reached  7.0%  in  December  2023.  It  continued  to  decelerate  in  the 
first 5 months of 2024, reaching 5.8% in May 2024. Annual HICP inflation rates in Romania in 2022 
and 2023 were on average higher than those for the euro area as a whole.    

The  Commission’s  Spring  2024  Economic  Forecast  expects  the  annual  average  rate  of  inflation  to 
decrease  to  5.9%  in  2024  and  to  ease  further  to  4.0%  in  2025,  supported  by  relatively  low  energy 
prices and moderate import  prices. The  relatively low price level in Romania (about 56% of the euro 
area average in 2022) suggests potential for price level convergence in the long term. 

15 

 
 
Romania  does  not  fulfil  the  criterion  on  public  finances.  Romania  is  subject  to  an  excessive 
deficit procedure. On 18 June 2021, the Council adopted a recommendation under Article 126(7) of the 
Treaty  (TFEU),  with  a  view  to  bringing  an  end  to  the  situation  of  an  excessive  government  deficit  in 
Romania by 2024 at  the latest. On 19 June 2024, the Commission recommended a  Council Decision 
establishing  that  Romania  had  not  taken  effective  action  in  response  to  the  Article  126(7) 
recommendation. The general government deficit remained high in 2023, reaching 6.6% of GDP. This 
was  mainly  due  to  continued  high  government  spending  growth,  particularly  in  goods  and  services, 
social  transfers  and  personnel  expenditure.  A  slowdown  in  government  revenue,  due  to  weaker  than 
expected  nominal GDP  growth, also  played a role. The Commission’s Spring 2024 Economic Forecast 
projects  that  the  general  government  deficit  will  increase  to  6.9%  of  GDP  in  2024.  It  is  forecast  to 
increase  slightly  further  to  7.0%  of  GDP  in  2025  under  the  ‘no  policy  change’  assumption.  The 
government  debt-to-GDP  ratio  increased  from  47.5%  in  2022  to  48.8%  in  2023  and  is  expected  to 
increase further to 50.9% in 2024 and 53.9% in 2025. Romania’s debt sustainability risks appear high 
in the medium term, particularly  because government  debt is projected to increase  rapidly to around 
103% of GDP in 2034. Romania has the appropriate legislative setting, but the implementation of its 
fiscal framework has generally been weak and has not improved since the last report. 

Romania  does  not  fulfil  the  exchange  rate  criterion.  The  Romanian  leu  does  not  participate  in 
ERM  II.  Romania  operates a  ‘crawl-like’  exchange  rate  arrangement  that  allows  for  foreign  exchange 
market  interventions  by  the  central  bank.  Exchange  rate  stability  has  been  used  by  the  BNR  as  an 
important  mechanism  to  ensure  financial  stability  and  anchor  inflation  expectations.  The  leu 
depreciated against the euro in 2022 and 2023. In May 2024, the leu was about 0.6% weaker against 
the  euro  than  2  years  earlier.  The  short-term  interest  rate  spread  vis-à-vis  the  euro  area  increased 
substantially (by around 400 basis points) between January and August 2022, reflecting the increase 
in the BNR’s key policy rate over this period. The short-term spread peaked at around 760 basis points 

16 

 
 
 
in  August  2022.  Subsequently,  the  spread  decreased  steadily  during  the  last  4  months of  2022  and 
throughout 2023, reflecting the ECB’s monetary tightening during this period and the sizeable liquidity 
surplus in Romania’s money market. It stood around 225 basis points in May 2024.  

Romania  does  not  fulfil  the  criterion  on  the  convergence  of  long-term  interest  rates.  The 
average long-term interest rate in the 12 months to May 2024 was 6.4%, above the reference value of 
5.5%. The long-term interest rate in Romania increased sharply in the first half of 2022, rising from 
5.4%  in  January  2022  to  9.3%  in  July  2022,  largely  reflecting  monetary  tightening  and  the  rise  in 
inflation,  together  with  increased  market  risk  aversion.  The  long-term  interest  rate  then  decreased 
significantly in the second half of 2022 and throughout most of 2023, reflecting the outlook for lower 
inflation. In the first 5 months of 2024, Romania’s long-term interest rate was broadly stable, standing 
at 6.3% in May 2024. The long-term spread versus the German benchmark bond was 377 basis points 
in that month, down from 818 basis points in July 2022. 

The Commission has also examined additional factors, including balance of payments developments, 
the  integration  of  markets  and  the  institutional  environment.  Romania’s  external  balance  (the 
combined current and capital account) improved from -6.7% of GDP in 2022 to -4.9% in 2023, mainly 
due to a significant decline in the goods trade deficit that was caused by a lower external energy bill 
and broadly flat imports driven by a notable deceleration in domestic demand. But the current account 
deficit  remains  large,  mainly  due  to  high  and  increasing  government  deficits  and  is  not  forecast  to 
improve this year and next. The Romanian economy is well-integrated with the euro area through trade 
and  investment  linkages.  Selected  indicators  relating  to  the  institutional  environment  show  that 
Romania performs worse than many euro area Member States. The main obstacles to investment and 
productivity  growth  include  labour  and  skills  shortages  and  mismatches,  volatile  tax  and  regulatory 
environment,  certain  aspects  regarding  the  functioning  of  the  judiciary,  insufficient  competition  in 
procurement,  poor  quality  of  education  and  training  and  large  gaps  in  transport  infrastructure.  The 
financial  sector  in  Romania  is  smaller  and  less  developed  than  in  the  euro  area.  Romania's  banking 
sector  is  well-integrated  into  the  euro  area’s  financial  system,  in  particular  through  a  high  level  of 
foreign ownership in its banking system. However, market-based financing is less developed, and this 
is  reflected  in  the  very  small  markets  for  equity  and  private  sector  debt.  In  the  context  of  the 
Macroeconomic  Imbalance  Procedure,  the  Commission  concluded  in  its  Alert  Mechanism  Report  for 
2024  that  an  In-Depth  Review  was  warranted  for  Romania.  The  latter  concluded  that  Romania  is 
experiencing excessive macroeconomic imbalances. Vulnerabilities relate to external accounts and are 
mainly  linked  to  large  government  deficits,  while  price  and  cost  pressures  have  increased,  with  a 
potential negative impact on cost competitiveness. At the same time, policy action has been week.  

Romania’s  recovery  and  resilience  plan  (RRP)  includes  measures  to  address  a  series  of  structural 
challenges,  in  synergy  with  other  EU  funds,  including  cohesion  policy  funds,  to  boost  its 
competitiveness  and  stimulate  sustainable  growth  and  reduce  the  country’s  territorial  and  social 
disparities.  The  RRF  funding  provides  Romania  with  EUR  28.5  billion  over  the  2021-2026  period. 
Romania has submitted three payment requests, resulting in an overall disbursement of EUR 9.4 billion 
on 29 September 2023. The implementation of the Romanian RRP faces significant delays. Structural 
challenges  are  linked  to  limited  administrative  capacity  and  lack  of  specific  actions  to  ensure  that 
reforms and investments can be completed on time. 

In addition, cohesion policy provides Romania with EUR 31 billion for the 2021-2027 period. Cohesion 
policy  financing  aims  to  further  support  Romania’s  competitiveness  and  upward  social  convergence, 
including  innovation  and  digitalisation,  the  green  and  just  transition,  the  modernisation  of  public 
employment services, the development of skills and  increased quality and inclusiveness of education 
and  training,  as  well  as  the  reduction  of  poverty.  Romania  has  made  progress  in  implementing 
cohesion  policy  but  challenges  remain  and  significant  territorial  disparities  in  investment  and 
employment persist between the capital region and the other regions, as well as between urban and 
non-urban areas. 

7. 

SWEDEN 

In  the  light  of  its  assessment  on  legal  compatibility  and  on  the  fulfilment  of  the 
convergence  criteria,  and  taking  into  account  the  additional  relevant  factors,  the 

17 

 
 
Commission  considers  that  Sweden  does  not  fulfil  the  conditions  for  the  adoption  of  the 
euro. 

Legislation  in  Sweden  -  particularly  the  new  Riksbank  Act,  is  not  fully  compatible  with  the 
requirements  of  Article  131  TFEU.  Incompatibilities  and  imperfections  exist  in  the  fields  of 
independence of the central bank, prohibition of monetary financing and privileged access and central 
bank integration into the ESCB at the time of euro  adoption with regard to the Riksbank’s objectives 
and the ESCB tasks laid down in Article 127(2) TFEU and Article 3 of the ESCB/ECB Statute. 

Sweden fulfils the criterion on price stability. The average HICP inflation rate in Sweden during 
the 12 months to May 2024 was 3.6%, below the reference value of 4.1%. The Commission projects it 
to be below the reference value in the coming months. 

Sweden’s annual inflation rate reached 5.9% in 2023, down from 8.1% in 2022. Having picked up in 
2021, inflation rose sharply in 2022 due to rising energy and food prices in the context of Russia’s full-
scale  invasion  of  Ukraine  and  due  to  supply  bottlenecks.  Price  increases  then  broadened  in  the 
economy. Furthermore, the weakening of the effective exchange rate of the krona from 2021 to the 
last quarter of 2023 contributed to price  increases for imported goods and services. After peaking at 
10.8% in December 2022, inflation decreased to slightly below 2% in December 2023, on the back of 
lower energy prices and broad base effects. At the beginning of 2024, base effects related to energy 
prices  and  services  inflation  accounted  for  a  slight  rebound  in  headline  inflation  while  food  prices 
eased further. In May 2024, annual HICP inflation stood at 2.5%. Annual HICP inflation rates in Sweden 
in 2022 and 2023 were on average broadly in line with those for the euro area as a whole.   

In the Commission’s Spring 2024 Economic Forecast, the Commission projects inflation to decrease to 
around 1.9% in 2024 before decreasing slightly further to 1.7% in 2025, as the economy normalises, 
and  despite  some  upside  price  persistence  (especially  for  services).  The  price  level  in  Sweden  is 
relatively high (about 116% of the euro area average in 2022).  

Sweden fulfils the criterion on public finances. Sweden is not the subject of a Council Decision on 
the existence of an excessive deficit. The general government balance deteriorated from a surplus of 
1.2%  of  GDP  in  2022  to  a  deficit  of  0.6%  of  GDP  in  2023,  reflecting  the  economic  slowdown,  and 
increases  in  government  expenditure  on  items  such  as  defence  and  higher  pension  costs  due  to  the 
increase  in  inflation.  According  to  the  Commission’s  Spring  2024  Economic  Forecast,  the  general 
government balance is expected to reach -1.4% of GDP in 2024 and -0.9% in 2025, partly reflecting 
weakening  nominal  revenues  and  increased  social  transfers  to  households.  The  government  debt-to-
GDP ratio decreased from 33.2% in 2022 to 31.2% in 2023 and is expected to stand at 32.0% of GDP 
in 2024, and 31.3% of GDP in 2025. Sweden’s debt sustainability risks appear low over the medium 
term, particularly as government debt is projected to decrease to around 22% of GDP in 2034. Sweden 
has a strong fiscal framework that was  reformed  in 2019,  preserving the key  pillars  of the previous 
set-up and reinforcing it with new elements (such as a debt anchor at 35% of GDP). 

18 

 
 
Sweden  does  not  fulfil  the  exchange  rate  criterion.  The  Swedish  krona  is  not  participating  in 
ERM II.  Sweden  operates  a  free-floating  exchange  rate  regime,  that  allows  foreign  exchange  market 
interventions by the central bank. The krona resumed its trend depreciation against the euro over 2022 
and  2023  amid  volatility  that  also  resulted  in  temporary  episodes  of  appreciation.  From  November 
2021  to  September  2023,  the  krona  depreciated  by  around  15%  against  the  euro  and  reached  a 
historical  low  of  12  SEK/EUR  in  September  2023.  It  then  recouped  some  of  its  losses  and  averaged 
11.2 SEK/EUR in December 2023. Since the beginning of 2024, the krona has depreciated again. During 
this weakening episode, the 3-months STIBOR-Euribor spread increased from around 50 basis points at 
the end of 2021 to 110 basis points in July 2022, before decreasing to around 15 basis points  at the 
beginning of 2024. It had averaged 66 basis points in 2022 and 27 basis points in 2023. In May 2024, 
the spread stood at -2 basis points and the exchange rate was 11.6 SEK/EUR, 10% weaker against the 
euro than 2 years earlier. 

Sweden fulfils the criterion on the convergence of long-term interest rates. The average long-
term interest rate in Sweden in the 12 months to May 2024 was 2.5%, well below the reference value 
of  5.5%.  Long-term  interest  rates  increased  markedly  over  2022  and  2023,  in  line  with  euro  area 
trends,  reflecting  the  monetary  policy  tightening  and  persistent  inflationary  pressures.  Swedish  long-
term interest rates increased from 0.1% at the end of 2021 to 3.0% in October 2023. They fell back to 
2.2% at the beginning of 2024 before rebounding slightly to 2.4% in May 2024. The spread vis-à-vis 
the  German  benchmark  bond  was  volatile  in  2022  and  2023.  It  peaked  at  slightly  above  80  basis 
points in May 2022 and decreased to slightly negative levels at the end of 2022. In May 2024, it stood 
at -14 basis points. 

The Commission has also examined additional factors, including balance of payments developments, 
the integration of markets and the institutional environment. Sweden’s external balance (the combined 
current and capital account) remained in surplus, at 5.5% of GDP in 2022 and 6.8% in 2023. Sweden’s 
economy  is  well-integrated  with  the  euro  area  through  trade  and  investment  linkages.  Selected 
indicators relating to the institutional environment show that Sweden performs better than most euro 
area Member States. The financial sector in Sweden is highly developed and well-integrated into the 
euro  area’s  financial  system.  Banking  dominates  the  financial  sector,  but  the  insurance  and  pension 
funds  are  integral  and  sizeable  parts.  Moreover,  Sweden  has  among  the  most  developed  credit  and 
equity  markets  in  the  EU,  and  the  level  of  market  financing  is  among  the  highest  among  Member 
States.  In  the  context  of  the  Macroeconomic  Imbalance  Procedure,  the  Commission  concluded  in  its 
Alert  Mechanism  Report  for  2024  that  an  In-Depth  Review  was  warranted  for  Sweden.  The  latter 
concluded  that  Sweden  is  experiencing  macroeconomic  imbalances,  related  to  its  real  estate  market 
and high private debt. Vulnerabilities relate to high fixed property prices and high private indebtedness. 
Furthermore, there are risks of further correction in commercial real estate valuations.  

Sweden’s  recovery  and  resilience  plan  (RRP)  includes  measures  to  address  a  series  of  structural 
challenges,  in  synergy  with  other  EU  funds,  including  cohesion  policy  funds,  to  boost  its 
competitiveness  and  stimulate  sustainable  growth  and  reduce  the  country’s  territorial  and  social 
disparities. The RRF funding provides Sweden with EUR 3.4 billion over the 2021-2026 period. Sweden 

19 

 
 
has not submitted any payment requests so far. The implementation of Sweden’s RRP is significantly 
delayed. 

In addition, cohesion policy  provides Sweden with EUR 1.7 billion for the 2021-2027  period. Cohesion 
policy  financing  aims  particularly  to  further  improve  conditions  for  research  and  innovation,  create 
industrial  transformation,  and  support  digitalisation, 
opportunities  for  entrepreneurship  and 
internationalisation and competitiveness. Sweden has made progress in implementing cohesion policy 
but challenges remain and disparities persist between the capital region and the rest of the country. 

20