Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Romania 
Date: 2024-11-26
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Romania, budget deficit, coordination of EMU policies, economic reform, fiscal policy, investment, macroeconomics, national planning, public debt, structural adjustment

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   EUROPEAN COMMISSION  Strasbourg, 26.11.2024  COM(2024) 725 final  Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Romania   
 
Recommendation for a 

COUNCIL RECOMMENDATION 

endorsing the national medium-term fiscal-structural plan of Romania  

THE COUNCIL OF THE EUROPEAN UNION,  

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121 thereof,  

Having regard to Regulation (EU) 2024/1263, and in particular Article 17 thereof,  

Having regard to the recommendation from the Commission,  

Whereas:  

(1) 

(2) 

1 

2 

3 

GENERAL CONSIDERATIONS  

A  reformed  EU  economic  governance  framework  entered  into  force  on  30  April 
2024. Regulation (EU) 2024/1263 of the European Parliament and of the Council on 
the  effective  coordination  of  economic  policies  and  on  multilateral  budgetary 
surveillance,1  together  with  the  amended  Regulation  (EC)  No  1467/97  on  the 
implementation  of  the  excessive  deficit  procedure,2  and  the  amended  Council 
Directive 2011/85/EU on the budgetary frameworks of Member States3 are the core 
elements of the reformed EU economic governance framework. The framework aims 
at  ensuring  public  debt  sustainability  and  sustainable  and  inclusive  growth  through 
reforms  and  investments.  It  promotes  national  ownership  and  has  a  medium-term 
focus, combined with an effective and coherent enforcement of the rules.   

The  national  medium-term  fiscal-structural  plans  that  Member  States  submit  to  the 
Council and to  the  Commission, are at  the centre of the new economic  governance 
framework. The plans are to deliver on two objectives: i) ensuring that, by the end of 
the  adjustment  period,  general  government  debt  is  on  a  plausibly  downward 
trajectory, or stays at prudent levels, and that the government deficit is brought and 
maintained below the reference value of 3% of GDP over the medium term, and ii) 
ensuring the delivery of reforms and investments responding to the main challenges 
identified  in  the  context  of  the  European  Semester  and  addressing  the  common 
priorities of the EU. To that end, each plan is to present a medium-term commitment 

Regulation 

(EC)  No 

Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  of  29  April  2024  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary  surveillance  and  repealing 
Council 
ELI: 
http://data.europa.eu/eli/reg/2024/1263/oj). 
Council Regulation (EU) 2024/1264 of 29 April 2024 amending Regulation (EC) No 1467/97 on speeding up 
and  clarifying  the  implementation  of  the  excessive  deficit  procedure  (OJ  L,  2024/1264,  30.4.2024,  ELI: 
http://data.europa.eu/eli/reg/2024/1264/oj). 
Council  Directive  (EU)  2024/1265  of  29  April  2024  amending  Directive  2011/85/EU  on  requirements  for 
30.4.2024,  ELI: 
budgetary 
http://data.europa.eu/eli/dir/2024/1265/oj). 

the  Member 

2024/1263, 

30.4.2024, 

frameworks 

2024/1265, 

(OJ  L, 

1466/97 

States 

(OJ 

L, 

of 

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to a net expenditure4 path, which effectively establishes a budgetary constraint for the 
duration  of  the  plan,  covering  four  or  five  years  (depending  on  the  regular  term  of 
legislature in  a Member  State). In  addition,  the plan is  to  explain how the Member 
State  will  ensure  the  delivery  of  reforms  and  investments  responding  to  the  main 
challenges  identified  in  the  context  of  the  European  Semester,  in  particular  in  the 
country-specific recommendations (including those pertaining to the macroeconomic 
imbalances  procedure  (MIP),  if  applicable),  and  how  the  plan  will  address  the 
common priorities of the Union.  The period for fiscal adjustment covers a period of 
four years, which may be extended by up to three years if the Member State commits 
to  delivering  a set  of  relevant  reforms  and investments that satisfies the criteria set 
out in Regulation (EU) 2024/1263.   

(3) 

(4) 

Following  the  submission  of  the  plan,  the  Commission  shall  assess  whether  it 
complies with the requirements of Regulation (EU) 2024/1263 

Upon  a  recommendation  from  the  Commission,  the  Council  is  to  then  adopt  a 
recommendation to set the net expenditure path of the Member State concerned and, 
where  applicable,  endorses  the  set  of  reform  and  investment  commitments 
underpinning an extension of the fiscal adjustment period.  

CONSIDERATIONS  CONCERNING  THE  NATIONAL  MEDIUM-TERM  FISCAL-
STRUCTURAL PLAN OF ROMANIA  

(5) 

(6) 

4 

5 

6 

On 25 October 2024, Romania submitted its national medium-term  fiscal-structural 
plan to the Council and to the Commission. The submission took place following an 
extension  of  the  deadline  set  out  in  Article  36  of  Regulation  (EU)  2024/1263,  as 
agreed with the Commission. The submission deadline was extended as agreed with 
the Commission in view of the reasons provided by Romania.  

Process prior to the submission of the plan   

On  21  June  2024  the  Commission  sent,  according  to  Article  9  of  Regulation  (EU) 
2024/1263,  the  reference  trajectory5  to  Romania.  The  Commission  published  the 
reference  trajectory  on  25  October6.  The  reference  trajectory  is  risk-based  and 
ensures that, by the end of the fiscal adjustment period and in the absence of further 

Net expenditure as defined in Article 2 of Regulation (EU) 2024/1263, namely government expenditure 
net  of  (i)  interest  expenditure,  (ii)  discretionary  revenue  measures,  (iii)  expenditure  on  Union 
programmes fully matched by revenue from Union funds, (iv) national expenditure on co-financing of 
programmes funded by the Union, (v) cyclical elements of unemployment benefit expenditure and (vi) 
one-offs and other temporary measures.  
Prior  guidance  transmitted  to  the  Member  States  and  Economic  and  Financial  Committee  includes 
trajectories  without  and  with  an  extension  of  the  adjustment  period  (covering  4  and  7  years, 
respectively).  It  also  includes  the  main  initial  conditions  and  underlying  assumptions  used  in  the 
Commission’s  medium-term  government  debt  projection  framework.  The  reference  trajectory  was 
calculated on the basis of the methodology described in the Commission’s Debt Sustainability Monitor 
2023  (https://economy-finance.ec.europa.eu/publications/debt-sustainability-monitor-2023_en).  It 
is 
based  on  the  Commission  2024  spring forecast  and  its  medium-term  extension  up  to  2033,  and  long-
term GDP growth and ageing costs are in line with the joint Commission-Council 2024 Ageing Report 
(https://economy-finance.ec.europa.eu/publications/2024-ageing-report-economic-and-budgetary-
projections-eu-member-states-2022-2070_en). 
https://economy-finance.ec.europa.eu/economic-and-fiscal-governance/national-medium-term-fiscal-
structural-plans_en#romania   

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budgetary measures beyond the adjustment period, general government debt is on a 
plausibly downward trajectory or stays at prudent levels over the medium term, and 
that the general government deficit is brought below 3% of GDP over the adjustment 
period  and  is  maintained  below  that  reference  value  over  the  medium  term.  The 
medium term is defined as the ten-year period after the end of the adjustment period. 
In accordance with Articles 6 point (d), 7 and 8 of Regulation (EU) 2024/1263, the 
reference  trajectory  is  also  consistent  with  the  deficit  benchmark,  the  debt 
sustainability safeguard and the deficit resilience safeguard. The reference trajectory 
of Romania sets out that, based on the Commission’s assumptions and assuming a 7-
year  adjustment  period,  net  expenditure  should  not  grow  by  more  than  the  values 
provided  in  Table  1.  This  corresponds  to  average  net  expenditure  growth  of  5.2% 
over the adjustment period (2025-2031) and of 5.5% over the period 2025-2028.    

Table 1: Reference trajectory provided by the Commission to Romania on 21 June 2024  

2025 

2026 

2027 

2028 

2029 

2030 

2031 

Average 
2025-2028 

Average 
2025-2031 

Maximum net 
expenditure growth 

(annual, %) 

6.1 

5.7 

5.3 

5.0 

4.8 

4.7 

4.5 

5.5 

5.2 

Source: Commission’s calculations.  

(7) 

(8) 

In line with Article 12 of Regulation (EU) 2024/1263, Romania and the Commission 
engaged  in  a  technical  dialogue  between  July  and  October  2024.  The  dialogue 
focused  on  the  net  expenditure  path  envisaged  by  Romania  and  its  underlying 
assumptions,  and  on  the  envisaged  set  of  reform  and  investment  commitments 
underpinning  Romania’s  request  for  an  extended  adjustment  period.  Discussions 
focused  on  the  tax  reform,  the  tax  administration  reform,  the  reform  of  the 
microenterprises  tax  regime,  and  spending  reviews.  It  also  touched  upon  the 
envisaged  delivery  of  reforms  and  investments  responding  to  the  main  challenges 
identified in the context of the European Semester and the common priorities of the 
Union  regarding  a  fair  and  green  digital  transition,  social  and  economic  resilience, 
energy security and the build-up of defence capabilities.  

In October 2024, in line with Article 11(3) and 36(1), point (c) of Regulation (EU) 
2024/1263, according to the information provided by Romania in its plan, Romania 
engaged in a consultation process with civil society and social partners. According to 
the information provided by Romania in its plan, on 16 October 2024, the plan was 
put into public debate with business representatives and the civil society.  

Other related processes   

(9) 

Romania is currently subject to an excessive deficit procedure7. On 3 April 2020, the 
Council, acting upon a recommendation by the Commission, adopted Decision (EU) 

7 

All documents related to the excessive deficit procedure of Romania can be found at:  

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2020/509  under  Article  126(6)  TFEU  on  the  existence  of  an  excessive  deficit 
situation  in  Romania  due  to  a  planned  non-compliance  with  the  deficit  criterion  of 
the TFEU, and issued a Recommendation under Article 126(7) TFEU with a view to 
bringing  an  end  to  the  situation  of  an  excessive  government  deficit  by  2022  at  the 
latest. In light of the deep contraction in economic activity linked to the COVID-19 
pandemic,  on  18  June  2021  the  Council  adopted  a  revised  Recommendation  under 
Article 126(7) TFEU to Romania, extending the deadline for the correction to 2024. 
On 24 November 2021, the Commission concluded that Romania had taken effective 
action  in  response  to  the  Council  Recommendation  of  18  June  2021  under  Article 
126(7)  TFEU  and  considered  that  no  additional  steps  in  the  excessive  deficit 
procedure were then necessary. However, in 2023 all sub-components of the Council 
Recommendation  addressed  to  Romania  in  2021  were  missed  by  a  significant 
margin. The headline deficit was significantly higher (6.5% of GDP vs 4.4% of GDP 
in  the  Council  Recommendation),  the  structural  effort  was  much  lower  than 
recommended, and growth in net expenditure much higher than recommended.   

Therefore, on 26 July 2024, the Council established that no effective action had been 
taken  by  Romania  in  response  to  the  Council  Recommendation  of  18  June  20218. 
The  present  Recommendation  coincides  with  the  revised  Council  Recommendation 
under  Article  126(7)  TFEU  with  a  view  to  bringing  an  end  to  the  situation  of  an 
excessive  government  deficit  in  Romania9.  The  simultaneous  adoption  of  those 
recommendations,  which  is  tailored  to  and  justified  by  the  transition  to  the  new 
economic  governance  framework,  ensures  consistency  between  the  recommended 
adjustment paths.   

On 19 June 2024, the Commission concluded that Romania is experiencing excessive 
macroeconomic  imbalances.  In  particular,  Romania  faces  vulnerabilities  related  to 
external  accounts, mainly linked to  large and increasing  government  deficits, while 
significant  price  and  cost  pressures  have  intensified  and  policy  action  has  been 
weak10.  

(10) 

(11) 

(12) 

On 21 October 2024, the Council addressed to Romania a series of country-specific 
recommendations (CSRs) in the context of the European Semester11.   

SUMMARY  OF  THE  PLAN  AND  THE  COMMISSION’S  ASSESSMENT  OF 
THEREOF  

(13) 

In line with Article 16 of Regulation (EU) 2024/1263, the Commission assessed the 
plan as follows:  

https://economy-finance.ec.europa.eu/economic-and-fiscal-governance/stability-and-growth-
pact/corrective-arm-excessive-deficit-procedure/excessive-deficit-procedures-overview/romania_en. 

8 
9 

10 

11 

OJ L, 1.8.2024, ELI: https://eur-lex.europa.eu/eli/dec/2024/2130/oj 
Recommendation for a Council Recommendation with a view to bringing an end to the situation of an 
excessive deficit in Romania, 26.11.2024, COM(2024)957 final. 
‘Communication from the Commission to the European Parliament, the Council, the European Central 
Bank, the European Economic and Social Committee, the Committee of the Regions and the European 
Investment Bank’, COM (2024) 600 final, Appendix 4 
Council Recommendation on economic, budgetary, employment and structural policies of Romania, not 
yet published. 

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Context: macroeconomic and fiscal situation and outlook   

(14) 

(15) 

Economic activity in Romania grew by 2.4% in 2023, driven by domestic demand. 
According  to  the  European  Commission  Autumn  2024  Forecast,  the  economy  is 
expected to grow by 1.4% in 2024, the deceleration reflecting softer developments in 
industrial production, residential construction, information technology and transport 
services. In 2025, real GDP is set to increase by 2.5%, supported by resilient private 
consumption  and  an  acceleration  of  private  investment,  both  helped  by  more 
accommodative  financial  conditions.  In  2026,  real  GDP  is  expected  to  increase  by 
2.9%  as  EU-funded  investment  in  public  infrastructure  should  provide  a  strong 
stimulus  to  growth  as  the  RRF  programme  enters  its  final  stage.  Over  the  forecast 
horizon (i.e., 2024-2026), potential GDP growth in Romania is expected to average 
2.2%,  driven  by  capital  deepening  and  growth  in  total  factor  productivity.  The 
unemployment  rate  stood  at  5.6%  in  2023  and  is  projected  by  the  Commission  to 
amount to 5.5% in 2024, 5.5% in 2025 and 5.4% in 2026. Inflation (GDP deflator) is 
projected  to  decrease  from  12.8%  in  2023  to  9.0%  in  2024,  and  to  reach  5.9%  in 
2025 and 5.3% in 2026.   

Regarding  fiscal  developments,  in  2023  Romania’s  general  government  deficit 
amounted  to  6.5%  of  GDP.  According  to  the  European  Commission  Autumn  2024 
Forecast, it is set to reach 8.0% of GDP in 2024, 7.9% of GDP in 2025 and, on a no-
policy change basis, 7.9% of GDP in 2026. The Commission forecast does not reflect 
Romania’s draft budget for 2025, which has yet to be designed. General government 
debt  was  48.9%  of  GDP  at  end-2023.  According  to  the  Commission  forecast,  the 
debt  ratio  is  expected  to  increase  to  52.2%  of  GDP  at  end-2024.  It  is  projected  to 
increase to 56.1% of GDP at end-2025 and 59.7% at end-2026. The fiscal forecast by 
the Commission does not consider the policy commitments in the medium-term plans 
as such until they are underpinned by credibly announced and sufficiently specified 
concrete policy measures.  

Net expenditure path and main macroeconomic assumptions in the plan   

(16) 

(17) 

(18) 

Romania’s national medium-term fiscal-structural plan covers the period 2025-2028 
and presents a fiscal adjustment over seven years.   

The  plan  contains  all  information  required  by  Article  13  of  Regulation  (EU) 
2024/1263.   

The plan commits to the net expenditure path indicated in Table 2, corresponding to 
average  net  expenditure  growth  of  4.8%  over  the  years  2025-2028.  In  addition, 
Romania commits to a set of reforms and investments with the view to extending the 
adjustment  period  to  7  years  (2025-2031),  over  which  the  average  net  expenditure 
growth  is  planned  to  be  4.4%.  The  average  net  expenditure  growth  reported  in  the 
plan  over  the  adjustment  period  (2025-2031)  is  lower  than  the  average  net 
expenditure  growth  in  the  reference  trajectory  transmitted  by  the  Commission  on 
21 June  2024  (5.2%).  The  plan  assumes  potential  real  GDP  growth  to  decrease 
gradually  from  2.7%  in  2024  to  2.0%  in  2031.  In  addition,  the  plan  expects  the 
growth rate of the GDP deflator to decrease from 7.2% in 2024 to 5.0% in 2025 and 
to gradually slow further to 4.4% in 2031.   

Table 2: Net expenditure path and main assumptions in Romania’s plan   

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Extension of the 
adjustment period 

2024  2025 

2026 

2027 

2028 

2029 

2030 

2031 

Average over 
the period of 
validity of 
the plan 

Average over 
the adjustment 
period 

2025-2028 

2025-2031 

14.3 

5.1 

4.9 

4.7 

4.3 

4.2 

3.9 

3.8 

4.8 

4.4 

14.3 

20.2 

26.0 

31.9 

37.6 

43.3 

49.0 

54.7 

n.a. 

n.a. 

2.7 

2.7 

2.5 

2.4 

2.2 

2.1 

2.0 

2.0 

2.4 

2.3 

7.2 

5.0 

4.9 

4.8 

4.7 

4.6 

4.5 

4.4 

4.8 

4.7 

Net expenditure 
growth 

(annual, %) 

Net expenditure 
growth 
(cumulative, 
from base year 
2023, %) 

Potential GDP 
growth (%) 

Inflation (GDP 
deflator 
growth) (%) 

Source: Medium-term fiscal-structural plan of Romania and Commission calculations.  

Implications of the plan’s net expenditure commitments for general government debt   

(19) 

If the net expenditure path committed to in the plan and the underlying assumptions 
materialise,  general  government  debt  would,  according  to  the  plan,  increase  from 
52.2% of GDP in 2024 to 62.6% of GDP in 2029, before declining to 61.4% of GDP 
in  2031,  as  per  the  following  table.  It  is  then  projected  to  continuously  decline  to 
levels well below 60% of GDP during the 10 years following the end of the period 
covered by the plan.   

Table 3: General government debt and balance developments in Romania’s plan   

2023 

2024 

2025 

2026 

2027 

2028 

2029 

2030 

2031 

2041 

Government 
debt  
(% of GDP) 

Government 
balance  
(% of GDP) 

48.8 

52.2 

55.7 

58.5 

60.6 

62.0 

62.6 

62.4 

61.4 

47.9 

-6.5 

-7.9 

-7.0 

-6.4 

-5.7 

-5.0 

-4.2 

-3.4 

-2.5 

-1.6 

Source: Medium-term fiscal-structural plan of Romania.   

Thus,  according  to  the  plan,  the  general  government  debt  ratio  would  be  brought 
below  the  Treaty  reference  value  of  60%  of  GDP  over  the  medium  term.  This  is 

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plausible, as, based on the plan’s assumptions, debt would be projected to stand below 
60%  of  GDP  by  2041  under  all  deterministic  stress  tests  of  the  Commission’s  Debt 
Sustainability  Analysis.  Therefore,  based  on  the  plan’s  policy  commitments  and 
macroeconomic  assumptions,  the  net  expenditure  path  put  forward  in  the  plan  is 
consistent  with  the  requirement  for  debt  as  set  out  in  Articles  6(a)  and  16(2)  of 
Regulation (EU) 2024/1263.   

Implications  of  the  plan’s  net  expenditure  commitments  for  the  general  government 
balance  

(20) 

Based  on  the  plan’s  net  expenditure  path  and  assumptions,  the  general  government 
deficit would decline from 7.9% of GDP in 2024 to 2.5% of GDP in 2031, the first 
year when it would be below 3% of GDP. Thus, according to  the plan, the general 
government balance would not exceed the 3% of GDP reference value at the end of 
the adjustment period (2031). In addition, in the ten years following the adjustment 
period  (i.e.  until  2041),  the  government  deficit  would  not  exceed  3%  of  GDP. 
Therefore,  based  on 
the  plan’s  policy  commitments  and  macroeconomic 
assumptions, the net expenditure path put forward in the plan is consistent with the 
requirement for the deficit as set out in  Articles 6(b) and 16(2) of Regulation (EU) 
2024/1263.   

Time profile of the fiscal adjustment  

(21) 

The  time  profile  of  the  fiscal  adjustment,  measured  as  the  change  in  the  structural 
primary balance, as described in the plan, is linear, as required by Article 6, point (c) 
of Regulation (EU) 2024/1263. As a result, the fiscal adjustment over the first four 
years  of  the  plan  is  proportional  to  the  total  adjustment  effort.  Therefore,  based  on 
the plan’s policy commitments and macroeconomic assumptions, the net expenditure 
path put forward in the plan is consistent with the no-backloading safeguard clause 
set out in Article 6, point (c), and the transitional provision in Article 36(1), point (e), 
of Regulation (EU) 2024/1263.   

Table 4: Structural primary balance developments in Romania’s plan   

2023 

2024 

2025 

2026 

2027 

2028 

2029 

2030 

2031 

Structural 
primary balance  
(% of GDP) 

Change in 
structural primary 
balance  
(pps.) 

-4.1 

-5.3 

-4.3 

-3.3 

-2.3 

-1.3 

-0.3 

0.7 

1.7 

n.a. 

1.0 

1.0 

1.0 

1.0 

1.0 

1.0 

1.0 

1.0 

Source: Medium-term fiscal-structural plan of Romania.  

Consistency of the plan with the excessive deficit procedure  

(22) 

The net expenditure path set out in the plan is in line with the requirements under the 
excessive  deficit  procedure  (in  particular  with  the  minimum  annual  structural 

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(23) 

(24) 

(25) 

adjustment  established  in  Article  3(4),  third  subparagraph  of  Council  Regulation 
(EC) 1467/97).  

Consistency of the plan with the deficit resilience safeguard  

The  requirement  of  the  preventive  arm  set  out  in  Article  8  of  Regulation  (EU) 
2024/1263  regarding  the  deficit  resilience  safeguard,  which  aims  to  provide  a 
common margin relative to the deficit reference value of 3% of GDP, does not apply 
to Romania, as the deficit is planned to be brought below 3% of GDP only in the last 
year of the adjustment period.   

Consistency of the plan with the debt sustainability safeguard  

According  to  the  plan,  government  debt  will  be  between  60%  and  90%  of  GDP 
between  2027  and  2031.  However,  as  according  to  the  plan  the  government  deficit 
would  go  below  3%  of  GDP  in  2031,  which  would  result  in  an  abrogation  of  the 
decision establishing the existence of an excessive deficit in the year after the end of 
the  adjustment  period,  the  debt  sustainability  safeguard  does  not  apply  during  the 
period covered by the plan.  

Macroeconomic assumptions of the plan  

The  plan  is  based  on  a  set  of  assumptions  which  differs  from  the  Commission’s 
assumptions transmitted to Romania on 21 June. In particular, the plan uses different 
assumptions for five variables, namely the starting point (structural primary balance 
in  2024),  potential  and  real  GDP  growth,  GDP  deflator  growth  and  it  takes  into 
account  the  assumed  depreciation  of  the  national  currency.  An  assessment  of  these 
differences  in  assumptions  is  provided  below. The  differences  in  assumptions  with 
the  most  significant  impact  on  average  net  expenditure  growth  are  listed  below, 
together with an assessment of each difference considered in isolation.   

• 

• 

The  plan  assumes  a  worse  initial  position  compared  to  the  Commission’s 
assumption.  The  structural  primary  balance  was  -4.4%  of  GDP  in  the  prior 
guidance  transmitted  to  Romania  in  June  2024  and  is  -5.3%  of  GDP  in  the 
plan.  The  lower  structural  primary  balance  in  the  plan  reflects  higher 
government  spending  in  the  first  three  quarters  of  the  year,  driven  by  fast 
increases  in  public  wages,  capital  expenditure  and  social  transfers.  The  2024 
primary balance projection in the plan is very close to that of the Commission 
autumn forecast and is realistic. Consequently, this assumption is deemed to be 
duly justified. It contributes to a lower average net expenditure growth over the 
the  Commission’s 
adjustment  period 
assumptions.  

than  according 

the  plan 

to 

in 

The  plan  assumes  potential  GDP  growth  to  be  lower  in  2024  and  higher  in 
2026-2028 compared to the prior guidance of June 2024. Overall, the series are 
similarly  stable  as  the  ones  in  the  prior  guidance.  This  contributes  to  higher 
average  net  expenditure  growth  over  the  adjustment  period  in  the  plan  than 
according to the Commission’s assumptions. The possibility to use alternative 
potential  growth  assumptions  is  in  line  with  Article  36(1)(f)  of  Regulation 
(EU) 2024/1263, provided that cumulative growth over the projection horizon 
(i.e. up to 2041) is broadly in line with the Commission’s assumptions, which 

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8 

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• 

• 

is  the  case  in  the  plan.  Consequently,  this  assumption  is  deemed  to  be  duly 
justified.  

The plan assumes a lower GDP deflator growth for 2025 compared to the prior 
guidance  of  Spring  2024,  which  results  in  lower  growth  rates  of  the  GDP 
deflator  throughout  the  adjustment  period  using  the  medium-term  linear 
convergence  rule  starting  from  that  lower  level.  This  contributes  to  lower 
average  net  expenditure  growth  over  the  adjustment  period  in  the  plan  than 
according  to  the  Commission’s  assumptions.  This  assumption is  cautious  and 
therefore duly justified.   

The Plan takes adequately into account its assumption of a depreciating RON 
exchange  rate  vis-à-vis  the  EUR  in  the  debt  trajectory.  This  assumption  is 
deemed to be duly justified and contributes to a lower average net expenditure 
growth  over  the  adjustment  period  in  the  plan  than  according  to  the 
Commission’s assumptions.  

The  remaining  difference  in  assumptions  does  not  have  a  significant  impact  on 
average  net  expenditure  growth  compared  to  the  Commission’s  assumptions. 
Overall,  all  the  differences  in  assumptions  taken  together  lead  to  an  average  net 
expenditure  growth  in  the  plan  that  is  lower  than  the  reference  trajectory. The 
Commission will take into account the above assessment of the plan’s assumptions in 
future assessments of compliance with this recommendation.  

Fiscal strategy in the plan   

(26) 

(27) 

According  to  the  indicative  fiscal  strategy  in  the  plan,  the  commitments  on  net 
expenditure  will  be  delivered  mainly  through  expenditure  restraint.  The  ratio  of 
government primary expenditure to GDP is projected to decline from 40.6% in 2024 
to 34.6% in 2031, i.e., 6 pps. over 7 years. All expenditure categories are projected to 
decline  as  a  share  of  GDP.  This  commitment  is  supported  to  some  extent  by  the 
expenditure  reforms  presented  in  the  plan  (spending  reviews,  pension  reforms, 
reform  of  state-owned  enterprises  governance)  but  rigorous  implementation,  and 
additional  measures  relative  to  those  included  in  the  plan,  will  be  necessary  to 
achieve  the  targets.  The  specification  of  the  policy  measures  is  to  be  confirmed  or 
adjusted and quantified in the annual budgets.  

At  the  same  time,  there  are  risks  to  the  implementation  of  the  indicative  fiscal 
strategy in  the plan. Most  of these commitments will have to  be implemented by a 
new government. Moreover, on 20 November 2024, the Minister of Labor and Social 
Solidarity announced an increase of 12.1% in the reference point value for pensions. 
This announcement implies a much larger (about 1% of GDP) increase in pensions 
than seems to be assumed in the plan, i.e. a nominal freeze in pensions in 2025.  

Set of reform and investment commitments in the plan to underpin an extension of the 
fiscal adjustment period   

(28) 

In the plan, Romania commits to a set of reforms and investments aiming to improve 
potential  growth  and  fiscal  sustainability,  to  underpin  an  extension  of  the  fiscal 
adjustment  period  from  4  to  7  years. The  set  of  reforms  and  investments 
underpinning  an  extension  of  the  adjustment  period  is  composed  of  several 
commitments from the recovery and resilience plan (RRP); some commitments from 

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9 

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the RRP with additional specifications; as well as some new reforms. This includes 
the following measures (see also Annex II):  

• 

Pension reform and reform of special pensions. These two reforms are existing 
RRP measures and correspond to milestones 213, 214, and  215 on the reform 
of  the  public  pension  system  of  Romania’s  RRP  that  have  already  been 
adopted. Full implementation of these reforms would significantly contribute to 
fiscal sustainability, but most of the impact will materialise over the long run. 
The  reform  of  special  pensions  foresees  a  gradual  alignment  of  replacement 
ratios  of  special  pensioners  with  that  prevailing  in  the  general  system.  The 
pension reform involves a complete overhaul of the system, with recalculation 
of  all  pensions  in  a  way  that  better  reflects  the  contributory  principle.  The 
reform  also  includes  provisions  that  encourage  longer  working  lives:  it 
provides  bonus  points  for  long  contribution  periods  and  links  the  statutory 
retirement age with developments in life expectancy. The fiscal impact of these 
reforms has been quantified by the World Bank.   

•  Minimum  wage  reform.  This  reform  commitment  is  additional  to  milestone 
392 of the RRP ensuring minimum wage setting and introduces a new system 
for  setting  the  gross  minimum  wage,  based  on  the  projected  inflation  and 
productivity growth rates by an independent institution, while ensuring that the 
minimum  wage  remains  within  a  certain  range  relative  to  the  average  wage. 
The  reform  aims  to  improve  predictability  of  minimum  wage  updates, 
supporting the avoidance of ad hoc increases with potential negative impact on 
cost competitiveness. The reform will be implemented in 2025 and is expected 
to generate extra revenue worth 0.1% of GDP.  

• 

• 

Reform  of the public sector remuneration system.  The  reform  commitment is 
additional to milestone 420 of Romania’s RRP on developing a fair unitary pay 
system in the public sector. The objective of the reform is to ensure a fair and 
fiscally  sustainable  wage  policy  by  revising  ranking  coefficients  for  each 
occupational  family,  salary scales for local  government officials,  and capping 
bonuses at 20% of the basic salary. The plan stresses the need for the reform to 
be  compatible  with  fiscal  sustainability,  to  be  implemented  while  respecting 
the envelope for total public sector compensation included in the plan, and the 
provisions  of  the  fiscal  responsibility  law.  The  reform  will  only  be 
implemented when the government deficit has been reduced to below 5.0% of 
GDP.  

Reform of the taxation of micro-enterprises. The plan refers to milestone 206 
of the Romanian RRP on the review of the tax framework. It summarises the 
measures  already  taken,  which  are  under  review  in  the  context  of  the  third 
payment request. The main objective of the reform is to reduce the scope of the 
micro-enterprises regime by tightening the eligibility conditions, while keeping 
the  system  as  simple  as  possible.  Some  measures  have  already  been  taken  in 
2022 and 2023, and the plan says the remaining steps will be phased in starting 
from  2025.  The  plan  estimates  this  reform  will  generate  0.1%  of  GDP  extra 
revenue  for  the  government.  Additional  revenue  could  be  generated  if  the 
reform  consisted  in  a  decisive  reduction  of  the  eligibility  threshold  to  the 
micro-enterprises  tax  regime,  and  alignment  with  the  VAT  threshold.  This 
would keep the system simple and make its administration easier.    

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• 

• 

• 

• 

Tax  reform.  This  is  an  existing  RRP  measure  and  concerns  milestones  205, 
207,  208  on  the  review  of  the  tax  framework,  as  well  as  milestone  237  on 
developing an automatic property valuation model. The description of the main 
objectives  of  the  reform  is  in  line  with  that  of  the  RRP  (greater  fairness, 
simplicity  and  predictability  of  the  tax  system,  better  incentives).  The  reform 
targets an increase in government revenue of 1.1% of GDP in 2025, net of the 
impact of the increase in the tax-free portion of pensions (which is equivalent 
to  a  tax  cut  worth  0.2%  of  GDP).  To  achieve  this  target,  new  measures  will 
need to be implemented by the end of Q1 2025, resulting in a full-year increase 
in government revenue by 1.7% of GDP. These measures are not yet specified 
but  the  plan  outlines  a  process  leading  to  implementation  of  the  reform  and 
mentions that all areas of taxation can be subject for reform.  

Reform  of  the  tax  administration.  This  reform  builds  on  commitments  in 
milestones  225  and  226  on  improving  tax  and  tax  administration  processes. 
The  main  objective  of  the  reform  is  to  increase  the  efficiency  and 
administrative capacity of ANAF, the tax administration agency, by leveraging 
digital  tools  and  implementing  stricter  monitoring  mechanisms.  It  includes 
several  measures,  in  particular:  introduction  of  a  VAT  fraud  early  detection 
mechanism;  introduction  of  analytical  tools  to  address  the  VAT  gap;  greater 
digital compliance monitoring; introduction of tax planning control mechanism 
for  large  and  medium-sized  taxpayers;  integrating  and  consolidating  internal 
databases;  and  amending  the  insolvency  legislation  to  ensure  greater  control 
over the situations of companies that declare themselves insolvent. The impact 
of this reform is estimated in the plan at 0.5% of GDP over the 7-year period, 
which seems plausible.   

improving 

Reform  of  the  public  expenditure  system.  This  reform  is  additional  to 
commitments  in  milestone  202  on  improving  the  budgetary  programming 
mechanism,  milestone  234  on 
the  budgetary  programming 
mechanism, and milestone 392 on ensuring minimum wage setting, as well as 
target  403  on  enhancing  the  predictability  and  efficiency  of  decision-making 
processes in government. The reform aims to increase efficiency, transparency, 
and  fiscal  responsibility  in  the  use  of  public  funds.  It  includes  measures  to 
control  unjustified  cost  overruns, 
systematic  expenditure 
assessments (spending reviews) and expand centralised procurement. The RRP 
and  the  plan,  taken  together,  include  several  measures  to  align  spending 
reviews  with  international  best  practice:  improve  government  ownership  and 
political  commitment  to  the  process,  hire  competent  staff  to  conduct  the 
reviews, include quantified savings targets, improve the governance structure, 
and  better  integrate  reviews  with  the  budget  process.  According  to  the  plan, 
this reform is estimated to generate permanent savings amounting to 0.35% of 
GDP, which seems plausible.  

implement 

Reform of the financing system for businesses. This is a new measure beyond 
those in the Romanian RRP and it aims to support the business environment, in 
particular the manufacturing industry and SMEs, and to creating private equity 
financing mechanisms “that are oriented towards economic performance”. The 
reform foresees, in particular, the establishment of an Investment Fund for the 
support  of  the  private  equity  business  for  SMEs,  a  new  legal  framework  to 
support  strategic  investments  in  the  economy  for  the  manufacturing  industry, 
and  a  new  legal  framework  for  granting  special  purpose  grants  for  the 

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(29) 

(30) 

(31) 

(32) 

• 

manufacturing industry. The impact of the reform is not quantified, but it can 
be expected to contribute positively, albeit marginally, to potential growth.   

Reform  of  the  expenditure  system  of  state/local  economic  operators  (state-
owned enterprises, SOEs). This reform is a new measure beyond those outlined 
in the RRP. The goal of this reform is to generate savings across SOEs, through 
efficiency  gains  and  greater  responsibility  in  spending  decisions.  This  reform 
includes several measures, such as the introduction of spending rules and new 
practices  to  better  manage  capital  spending,  going  in  the  right  direction. 
Potential additional revenues are estimated in the plan at 0.25% of GDP for the 
entire  period  of  the  plan,  which  according  to  the  Commission  seems 
ambitious.   

In  line  with  Article  14  (3)  of  Regulation  (EU)  2024/1263,  each  reform  and 
investment  underpinning  an  extension  of  the  adjustment  period  is  sufficiently 
detailed, front-loaded, time-bound and verifiable.   

The  RRP  commitments  underpinning  the  extension  contain  significant  reforms  and 
investments  aimed  at  improving  fiscal  sustainability  and  enhancing  the  growth 
potential  of  the  economy.  In  addition,  Romania  commits  to  continuing  the  reform 
effort  over  the  period  covered  by  the  medium-term  fiscal-structural  plan  and 
maintaining  the  nationally  financed  investment  levels  realised  over  the  period 
covered  by  the  RRP  (see  below,  Table 5).  The  commitment  will  be  monitored 
throughout the implementation phase of the plan. Accordingly, commitments under 
the  RRP  can  be  taken  into  account  for  the  extension  of  the  adjustment  period  as 
provided by Article 36 (1), point (d) of Regulation (EU) 2024/1263.   

The  set  of  reforms  and  investments  underpinning  the  extension  is  expected  to 
improve the growth and resilience potential of Romania’s economy in a sustainable 
manner  as  required  by  Article  14(2),  point  (a)  of  Regulation  (EU)  2024/1263.  The 
plan does not provide quantified estimates of the impact of reforms and investments 
on  potential  growth.  However,  pension  reforms  (general  system  and  special 
pensions)  should  over  time  contribute  to  a  larger  labour  force  relative  to  the  non-
reform scenario and therefore increase potential GDP. Moreover, the plan foresees a 
large  increase  in  public  investment,  especially  in  the  early  years  of  the  period 
covered by the plan, from 5.4% of GDP in 2023 to 7.1% in 2025 and 7.3% in 2026. 
These investments, in all areas including key infrastructure, will help increasing the 
growth  potential and resilience of the economy.  Spending  reviews should also  help 
reallocation of resources within the budget towards growth enhancing priorities.   

The set of reforms and investments underpinning the extension is expected to support 
fiscal  sustainability  as  required  by  Article  14(2),  point  (b)  of  Regulation  (EU) 
2024/1263.  Reforms  related  to  the  revenue  side  of  the  budget  will  generate 
significant  additional  revenue  for  the  government.  The  cumulative  effect  of  the  tax 
reform,  the  reform  of  tax  administration,  and  the  reform  of  the  tax  regime  for 
microenterprises  should,  when  fully  implemented,  yield  additional  revenue  of  the 
order  of  2.0%  to  2.5%  of  GDP.  On  the  expenditure  side,  reforms  aimed  at 
strengthening  spending  reviews  and  the  management  of  state/local  economic 
operators (SOEs) are expected to generate savings worth 0.5% to 1.0% of GDP, even 
if some of the estimates in the plan seem on the high side. Also, the unitary pay law 
for public sector employees should, if implemented within the envelope foreseen in 
the plan, allow for a meaningful reduction of the public wage bill as a share of GDP 
by 1.5% of GDP between 2024 and 2031 according to the plan. Finally, the pension 

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(33) 

(34) 

(35) 

reforms  (general  system  and  special  pensions)  will  already  generate  savings  by  the 
end  of  the  7-year  period  covered  by  the  plan,  but  the  bulk  of  the  savings  will 
materialise over the longer term.   

The  set  of  reforms  and  investments  underpinning  the  extension  contributes  to  the 
common  priorities  of  the  EU  as  required  by  Article  14(2),  point  (c)  of  Regulation 
(EU) 2024/1263. Most of the reforms underpinning the extension request contribute 
to  social  and  economic  resilience,  by  ensuring  fiscal  stability,  improving  the 
efficiency  of  the  public  sector  and  promoting  sustainable  economic  growth. 
Commitments  in  the  area  of  improving  tax  administration  and  implementing 
thorough  spending  reviews  should  over  time  allow  to  reallocate  resources  towards 
priorities favouring economic performance and social improvements. The reform of 
the  minimum  wage  setting  mechanism  should  secure  an  appropriate  level  for  the 
minimum  wage  that  respects  social  and  economic  priorities.  Pension  reforms 
(general system and special pensions) will secure the sustainability of the system and 
increase  equity  and  fairness  in  the  level  of  pensions.  Finally,  improvements  in  the 
digitalisation of the tax administration should contribute to the digital transition. The 
other common priorities of the EU, namely ensuring energy security and the build-up 
of  defence  capabilities,  are  not  directly  addressed  by  the  set  of  reforms  and 
investments underpinning an extension, though the former is addressed in Romania’s 
RRP.  

The set of reforms and investments underpinning the extension addresses some of the 
relevant12 CSRs issued as part of the European Semester as required by Article 14(2), 
point  (d)  of  Regulation  (EU)  2024/1263.  In  particular,  reforms  are  expected  to 
contribute  to  the  CSR  issued  in  2023  on  addressing  the  fiscal  recommendation 
requesting  Romania  to  correct  its  excessive  deficit  and  addressing  excessive 
imbalances.  In  the  macroeconomic  scenario  underpinning  the  plan,  the  current 
account deficit is projected to narrow from 7.7% of GDP in 2024 to 4.1% of GDP in 
2031.  Most  of  the  impact  comes  from  the  reduction  in  the  government  deficit, 
supported by the reforms underpinning the request for an extended adjustment path. 
Slower  growth  in  government  spending  and  prudent  income  policies  (moderate 
increases  in  pensions  and  public  wages,  minimum  wage  reform)  are  expected  to 
support competitiveness.   

The minimum wage reform and the pension reform are expected to help address CSR 
recommendations from 2019 on the need to ensure minimum wage setting based on 
objective  criteria,  consistent  with  job  creation  and  competitiveness.  Reforms  on 
restructuring of the public expenditure system (spending reviews) and the reform of 
the  public  sector  wage  system  are  expected  to  help  address  CSR  recommendations 
from 2019 and 2020 on the need to improve the efficiency of public procurement and 
the quality and effectiveness of public administration. Moreover, the pension reform 
and  the  reform  of  special  pensions  will  help  address  the  CSR  issued  in  2019  on 
ensuring the sustainability of the public pension system and the long-term viability of 
the  second  pillar  pension  funds,  while  the  tax  reform  and  the  reform  of  the  tax 
administration will contribute to addressing CSRs from 2019, and 2020 on ensuring 

12 

CSRs considered ‘relevant’ are recommendations: i) adopted by the Council from 2019 onwards, ii) for 
which the Member State has not yet made ‘full’ or ‘substantial’ progress in addressing them and are not 
outdated (assessed as ‘Not Assessed / No Input to Add ’), as assessed in the latest European Semester 
surveillance exercise (available in CeSaR (europa.eu)), iii) not linked to purely fiscal SGP-related and 
iv) not covering the same challenge but in a rephrased manner. 

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fiscal sustainability and strengthening tax compliance and collection. Most measures 
underpinning  the  extension  of  the  adjustment  period  should  also  help  address  CSR 
recommendations  from  2022  and  2023  on  pursuing  fiscal  policies  with  a  view  to 
bringing an end to the situation of an excessive government deficit.   

(36) 

The  plan  ensures  that  the  planned  overall  level  of  nationally  financed  public 
investment realised on average over the period covered by the RRP is maintained, as 
required by Article 14(4) of Regulation (EU) 2024/1263.  

Table 5: Nationally financed public investment in the plan (% of GDP)  

Average level 
over period 
covered by the 
RRP (2021 to 
2026) 

2025 

2026 

2027 

2028 

2029 

2030 

2031 

Average over the 
duration of the plan 
(2025-2028) 

4.1 

5.3 

5.6 

4.8 

4.3 

4.1 

3.6 

3.2 

5.0 

Source: Medium-term fiscal-structural plan of Romania  

(37) 

Finally,  the  set  of  reform  and  investment  commitments  underpinning  an  extension 
can be regarded as consistent with the commitments in the RRP and the Partnership 
Agreement  agreed  under  the  Multiannual  Financial  Framework  as  required  by 
Article 14(2), point (d) of Regulation (EU) 2024/1263. Namely, in accordance with 
the  requirements  of  Regulation  (EU)  2024/1263,  each  commitment  is  expected  to 
operate  in  continuity  and  complementarity  with  the  RRP  or  the  Partnership 
Agreement of Romania’s European cohesion policy, and to respond to the CSRs, and 
to one or more common EU priorities.  

(38) 

In conclusion, the set of reforms and investments underpinning the extension of the 
adjustment period is assessed as fulfilling, taken altogether, the criteria in Article 14 
of  Regulation  (EU)  2024/1263.  As  a  result,  the  adjustment  period  can  be  extended 
from 4 to 7 years, as put forward in the plan.  

Other reform and investment intentions in the plan responding to the main challenges 
identified in the context of the European Semester and addressing the common priorities 
of the Union  

(39) 

(40) 

Besides  the  set  of  reforms  and  investments  underpinning  an  extension  of  the 
adjustment period, the plan describes policy intentions concerning other investments 
to  respond  to  some  of  the  challenges  identified  in  the  context  of  the  European 
Semester, especially the CSRs, including those pertaining to the MIP, and to address 
the common priorities of the EU.   

Concerning the common priority of a fair green and digital transition, including the 
climate objectives  set  out  in Regulation  (EU) 2021/1119,  the plan includes reforms 
and  investment  to  support  the  decarbonisation  of  large  industries  (steel  and 
chemicals), through electrification of production processes and switching to the  use 
of renewable hydrogen or renewable hydrogen fuels. The total budget of the scheme 
is EUR 1 bn, with payments to be made in the period 2025-2031. The financing of 
this scheme is to be achieved through the sale of greenhouse gas emission allowances 

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(41) 

(42) 

(CO2  allowances).  The  plan  also  includes  an  investment  programme  for  the 
rehabilitation  of  main  irrigation  infrastructure  (EUR  2.3  bn)  and  drainage 
infrastructure  (EUR  34  mn).  These  measures  will  help  addressing  CSRs  issued  in 
2022 and 2023 related to the need to reduce reliance on fossil fuels and accelerate the 
energy transition, by deploying renewable energy faster and improving grid capacity 
to allow new capacity to operate in the market. Aspects related to the fairness of the 
green and digital transition are not described in the plan.  

Concerning  the  common  priority  of  social  and  economic  resilience,  including  the 
European Pillar of Social Rights, the plan includes a new State Support scheme for 
investments to support regional development, through large scale investment projects 
targeting high-end sectors and supporting the diversification of economic activities in 
the least favoured regions. The total allocated budget is EUR 450 mn. The plan also 
includes  a  State  aid  scheme  for  strategic  investments,  with  grants,  tax  breaks  and 
administrative  simplification  measures  (shortening  of  deadlines  for  permits,  direct 
award of land for the implementation of investments in the public or private domain 
owned by the state/local public authorities, provision of transport infrastructure and 
utilities necessary for the investments). The total budget of the scheme is EUR 1 bn, 
with payments to be made in the period 2025-2031. The sectors that will be able to 
benefit  from  this  scheme  are:  the  food  industry,  the  chemical  industry,  the 
pharmaceutical  industry,  the  metallurgical  industry,  the  defence  industry,  the  metal 
construction  industry,  construction  of  machinery  and  installations,  manufacture  of 
machinery  and  equipment,  and  electrical  equipment.  These  measures  will  help 
address the CSR on the provision of liquidity support to the economy for businesses 
issued in 2020.  

to 

of 

the 

shift 

healthcare 

(including 

cost-efficiency 

However, the plan does  not address other important CSRs in the area of social and 
economic  resilience,  including   CSR  recommendations  from  2019  and  2020  on 
increasing  the  coverage  and  quality  of  social  services,  extending  social  protection 
measures,,  completing  the  minimum  inclusion  income  reform,  improving  access  to 
and 
outpatient 
care),   strengthening  the  resilience  of  the  health  system  (including  in  the  areas  of 
health workers and medical products), and improving access to health services. CSR 
recommendations issued in 2019 and 2020 on the need to improve the functioning of 
social  dialogue  and  the  predictability  of  decision-making,  including  through  an 
adequate  involvement  of  social  partners,  are  not  fully  addressed,  even  if  the 
minimum wage reform goes in the right direction. The CSR recommendations from 
2019 and 2020 on improving the quality and inclusiveness of education (in particular 
for Roma and other disadvantaged groups), on improving skills, including digital (by 
increasing  the  labour  market  relevance  of  vocational  education  and  training  and 
higher education), on strengthening skills and digital learning, and on ensuring equal 
access  to  education  are  not  addressed.  Additionally,  the  2023  CSR  on  stepping  up 
policy efforts aimed at the provision and acquisition of the skills needed for the green 
transition  is  not  addressed.  Overall,  the  investments  listed  in  the  Plan  do  not 
sufficiently address CSRs in the employment, skills and social domain.    

(43) 

Concerning  the  common  priority  of  energy  security,  the  plan  mentions  Romania’s 
participation  in  trans-national  energy  transport  infrastructure  initiatives  aimed  at 
increasing  Europe’s  energy  security,  including  the  Southern  Corridor,  the  BRUA 
Corridor (Bulgaria-Romania-Hungary-Austria) and the Trans-Balkan Corridor.  

(44) 

Concerning  the  common  priority  of  defence  capabilities,  the  plan  refers  to  new 
initiatives  to  regulate  the  general  legal  framework  for  granting  facilities  to 

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(45) 

(46) 

investments  with  a  significant  impact  in  the  field  of  manufacturing.  One  of  these 
facilities is a state aid scheme aiming at covering, inter alia, the defence industry.  

The  plan  provides  some  information  on  the  consistency  and,  where  appropriate, 
complementarity,  with  the  cohesion  policy  funds  and  Romania’s  RRP.    cohesion 
policy  funds  and  their  benefits  for  Romania,  and  stresses  the  complementarity 
between national and European funds, especially regarding major infrastructure and 
rural  development  projects,  and  that  the  success  of  the  use  of  European  funds 
depends on the efficient management of European funds and funds allocated through 
Romania’s consolidated general budget.  

The plan provides an overview of the public investment needs of Romania related to 
the common priorities of the EU. Concerning a fair, green and digital transition, the 
plan  refers  to  the  aid  scheme  for  the  decarbonisation  of  industrial  production 
processes  by  electrification  of  production  processes  and  switching  to  the  use  of 
renewable hydrogen or renewable hydrogen fuels. In relation to social and economic 
resilience,  including  the  European  Pillar  of  Social  Rights,  the  plan  reports  in 
particular the need to implement an investment programme for the rehabilitation of 
the main irrigation infrastructure, the state aid scheme to support investment projects 
in  the  manufacturing  sector,  and  investments  to  ensure  the  regional  development 
including large scale investment projects. On the build-up of defence capabilities, the 
plan  reports  the  need  to  fully  implementation  the  state  aid  scheme  for  strategic 
investments, with grants, tax breaks and other forms of support, which will support 
the defence sector, among others.  

Conclusion of the Commission’s assessment  

(47) 

Overall, the Commission is of the view that Romania’s plan fulfils the requirements 
of Regulation (EU) 2024/1263.   

OVERALL CONCLUSION  

(48) 

In  accordance  with  Article  17  of  Regulation  (EU)  2024/1263,  the  net  expenditure 
path as set in the plan should be recommended by the Council to Romania and the set 
of reforms and investments underpinning the extension of the adjustment period to 7 
years should be endorsed.  

HEREBY RECOMMENDS that Romania  

1. 

2. 

Ensure that net expenditure growth does not exceed the maxima established in Annex 
I to this Recommendation.  

Implement the set of reforms and investments that underpins the extension of the fiscal 
adjustment period to 7 years, as established in Annex II to this Recommendation, by 
the indicated deadlines.  

In  addition,  the  Council  invites  Romania  to  ensure  the  delivery  of  other  reforms  and 
investments  responding  to  the  main  challenges  identified  in  the  context  of  the  European 
Semester, in particular in the country-specific recommendations, and addressing the common 
priorities of the Union.   

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ANNEX I 

Maximum nominal growth rates of net expenditure  
(annual and cumulative growth rates, in nominal terms)  
Romania  

Years 

2025 

2026 

2027 

2028 

Growth rates 
(%) 

Annual 

5.1 

4.9 

4.7 

4.3 

Cumulative 
(*) 

20.2 

26.0 

31.9 

37.6 

(*) The cumulative growth rates are calculated by reference to the base year 2023.  

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ANNEX II  
Set of reforms and investments that underpins an extension of the adjustment period to 7 years for Romania  

Main objectives  

Description and timing of key 
steps13 

Monitoring 
indicator(s)  

The normative act reforming the 
general pension system entered into 
force on 1st September 2024.  

Pension Reform  
(Existing RRP 
measure: 
C8.R6.0.M214)  

Special Pension 
Reform (Existing 
RRP measure: 
C8.R6.0.M215)  

Minimum Wage 
Reform  

[Adding to RRP 
milestone 
C13.R5.0.M392]  

The key objective of the reform is to ensure 
the sustainability of the general pension 
system. The reform includes the following 
elements: new calculation formula for 
pensions, new pension indexation rule and a 
mechanism to prevent ad-hoc increases in 
pensions, reduced early retirement 
opportunities, incentives to extend working 
life, automatic increase in the standard 
retirement age in line with life expectancy, 
alignment of the legal retirement age for men 
and women at 65 years by 2035.  
The new legislative framework revises 
special pensions to better align them with the 
contributory principle. No new categories of 
special pensions are created, and the existing 
categories are streamlined. Special pensions 
are calculated based on the contributory 
principle, length of service, and adjustment of 
the percentage linked to earnings. The 
minimum contribution period is similar to 
that applied in the general pension system. No 
special pension is allowed to exceed the 
income earned during the contribution 
period.  
Establishing a minimum wage setting 
mechanism based on objective criteria that 
supports job creation and national 
competitiveness, involving the adjustment of 
the gross minimum wage in line with the 
forecasted inflation rate and productivity 
growth rate.   

If  the  new  ratio  between  the  adjusted  gross 
minimum  wage  and  the  forecasted  average 
gross  wage  for  the  following  year  is  below 
45%,  the  gross  minimum  wage  may  also  be 
additionally  adjusted  by  0%  -  50%  of  the 
forecasted  productivity  growth  rate,  but  the 
ratio should never exceed 50%.  

Public Sector 
Wage Reform   

[Adding to RRP 
milestone 
C14.R4.0.M420]  

Ensure a fair and sustainable wage policy by 
revising the hierarchy coefficients for each 
occupational family of the public sector, 
reintroducing salary grids for local 
administration officials, revising the 
allowance system and capping the monetary 
amount of allowances at 20% of the basic 
salary.  

Relevant RRP 
milestone 
C8.R6.0.M214 
satisfactorily fulfilled  

Implement the law in 
accordance with the 
Plan.  

Relevant RRP 
milestone 
C8.R6.0.M215 
satisfactorily fulfilled   

Entry into force of the 
normative act   

Entry-into-force of the 
new legislative 
framework, after the 
government deficit has 
been reduced to below 
5% of GDP.   

The normative act revising special 
pensions to align them with the 
contributory principle entered into 
force on 1st January 2024.  

By Q1-2025:  

Entry into force of the act 
regulating the new minimum wage 
setting system.  

When the government deficit is 
below 5% of GDP:  

Step 1: Adoption and entry into 
force of the new legal framework 
for the remuneration of public 
officials, ensuring the public wage 
bill remains, as a share of GDP, in 
line or below that included in the 
projections of the medium-term 
fiscal plan.  

Ensuring the fiscal sustainability of the 
remuneration system of public sector 
officials. To this end, the reform will come 
into effect only after the budget deficit, in 
ESA terms, falls below 5% of GDP 
(including if that implies amending the timing 
of this reform under the RRP). The new 

Step 2: Rigorous adherence to the 
projections of the MTFSP regarding 
the public wage bill as a share of 
GDP, for all the years covered by 

Reduction in the public 
wage bill, as a share of 
GDP, by 1.5 pps 
between 2024 and 

13 

The  timing  of  RRP  measures  is  indicative  and  corresponds  to  commitments  in  the  relevant  Council 
Implementing Decision. 

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system will be implemented fully respecting 
provisions of the Fiscal-Budgetary 
Responsibility Law. The reform will ensure 
the public wage bill will remain contained 
within the envelope in the medium-term 
structural budget plan. 
Gradual reduction of the scope of the tax 
regime for micro-enterprises. Ensure full 
compliance with the objectives of milestone 
206 of the RRP, including by reviewing the 
eligibility threshold to the regime (and 
possibly aligning it with the VAT threshold 
over the medium term), and updating the tax 
rate for micro-enterprises. Relative to the 
system currently in place, the reform 
generates additional revenue of at least 0.1% 
of GDP in 2025 and beyond.  

the plan.  

By Q1-2025:   

Preparation and entry into force by 
the end of Q1-2025 of a law 
amending the taxation regime of 
microenterprises, to bring it in line 
with milestone 206 of the RRP.  

Microenterprise 
Tax Reform  

[Adding to RRP 
milestone and 
target 
C8.R4.0.M206]  

2031, in  line with the 
projections of the 
medium-term fiscal 
plan.   

Entry into force of a 
normative act 
amending the 
eligibility conditions to 
the tax regime for 
microenterprises, to 
bring it in line with 
milestone 206 of the 
RRP and generating 
0.1% of GDP in 
additional revenue.  

Step 1: Report by the 
authorities  

Review of the Tax 
Framework  

[Adding to RRP 
milestones and 
targets 
C8.R4.0.M207, 
C8.R4.0.M208, 
C8.I7.0.M237]  

Implementing a tax reform that contributes to 
fiscal consolidation and promotes better 
economic incentives. The budgetary impact 
of the reform in 2025 should be at least 1.1% 
of GDP, net of the impact of raising the non-
taxable threshold for pension income (0.2% 
of GDP). The new measures therefore have a 
total impact of 1.3% of GDP in 2025. Since 
measures will be implemented by the end of 
Q1-2025, the full-year permanent impact of 
the new measures should be 1.7% of GDP.  

Operationalising the information system for 
assessing properties subject to property taxes, 
with the following characteristics:    

• 

Interoperability of databases 
containing information about 
properties held by various 
institutions.  

•  Operationalisation of a dedicated 
department within the Ministry of 
Finance.   

•  Creation of a Property Sales Price 
Registry for residential properties, 
development of a mass valuation 
model for residential properties.  
Establishment of a mechanism for 
determining the taxable value of 
real estate using market value 
assessment mechanisms.  

• 

Tax 
Administration 
Reform  

[Adding to RRP 
milestones and 
targets 
C8.I2.0.M225 
C8.I2.0.M226  

The main objective is to improve tax 
administration and generate additional 
government revenue amounting to at least 
0.5% of GDP in 2026.  

In particular, the reform aims to:  

Enhance ANAF’s Anti-Fraud Unit with a 
real-time monitoring tool for detecting high-

By Q1-2025:   

Step 1:  Preparation of a Report, 
building on the World Bank report 
on taxation (prepared under RRP 
milestone 205) establishing two 
scenarios for the tax reform, with 
fully specified measures. Measures 
should cover all areas of taxation 
and social contributions.   

Step 2:  Government adoption of a 
memorandum including specific tax 
measures based on the above-
mentioned report. Measures should 
be in line with milestones 207, 208, 
and 237 of the RRP, and objective 1 
of the tax reform.  

Step 2: Adoption of a 
memorandum by the 
government, in line 
with the main 
objectives of the 
reform,   

Step 3:  
Government organises a public 
debate on the amendments to the 
Fiscal Code.  

Step 3:  
Public debate with the 
private sector.  

Step 4: Implementation and entry 
into force of the measures on 1 
April 2025 at the latest.  

By Q4-2025:   

Step 4: Entry into force 
of the measures in line 
with Objective 1 of the 
reform.   

Step 5: Report by the 
authorities.   

Step 5: As referenced in milestone 
237 of the RRP, developing an IT 
system to implement the automated 
property assessment model for real 
estate taxation, supporting the new 
market value-based approach, and 
operationalising a specialized 
department with responsibilities in 
the field of property taxation.  
By Q1-2025 (Q4-2026 for APIC):  

Step 1:  
Implementation of an early 
detection mechanism for VAT fraud 
associated with intra-community 
purchases, transits, and domestic 
transactions.  

Steps 1-7: Reports by 
the authorities.  

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C8.I2.0 M226a  
C8.I3.0 M227]  

risk taxable purchases related to intra-
community, transit, and domestic 
transactions.   

Implement analytical tools and a dedicated 
anti-fraud module to address and analyse the 
VAT gap. Increase capacity to detect 
irregularities within systems such as e-
Invoice, SAF-T, e-AMEF, e-DU, e-VAT, 
DAC-7, and CESOP.  

By Q2-2025:  

Step 2: Implementation of anti-
fraud modules for analysing and 
identifying transactions suspected 
of carousel fraud (CARUSEL, 
INDFISC, TRANSPRISC, 
COMRISC, and RORISC).  

By Q2-2025:  

Expand the "Predictive Analysis" program to 
cover a broader range of taxpayers, enhancing 
tax inspection efficiency for VAT and 
corporate income tax.   

Step 3: Completion of 7 
digitalisation projects, including e-
Invoice, SAF-T, e-AMEF, e-DU, e-
VAT, DAC-7, and CESOP.  

The revenue to GDP 
ratio should increase by 
at least 0.5% of GDP in 
2026 relative to 2024, 
net of the impact of 
new measures 
influencing tax bases 
and tax rates taken in 
2025 and 2026. This 
will be assessed in 
April 2027 based on 
national accounts.   

Establish a taxpayer risk-ranking system and 
develop an IT tool to manage and analyse 
large volumes of data for determining 
taxpayer risk categories.  

Modernise and ensure interoperability of 
taxpayer administration systems with those of 
other state institutions to improve tax 
information management and real-time asset 
and transaction access. Redesign the 
information system to reduce delays in audits 
and tax inspections.  

Amend insolvency legislation to gain better 
control over companies declaring insolvency 
and reduce the VAT gap.   

Implement an automatic payment mechanism 
to increase voluntary compliance and 
introduce flexible mechanisms for the sale of 
movable goods through retail centres.  

Establish a specialised department to conduct 
risk analyses using models, operationalize 
anti-fraud modules, quantify the VAT gap, 
and strengthen ANAF’s anti-evasion 
capacity.  

By Q1-2025:  

Step 4: Strengthen oversight of the 
tax planning mechanism for large 
taxpayers and the extension of this 
mechanism to medium-sized 
taxpayers after the implementation 
of APIC.  

By Q4-2025:  

Step 5: Integrating and 
consolidating internal databases; 
developing a new system based on 
the 360-degree profiling concept of 
taxpayers; ensuring interoperability 
with the information systems of 
state institutions.   

By Q4-2026:  

Step 6: Implementation of a 
modern collection mechanism that 
provides taxpayers with the option 
to choose recurring payment of 
declared tax liabilities.  

By Q4-2025:  

Step 7: Establishment and 
operationalisation of a specialised 
structure comprised of experts in 
IT, econometrics, and financial 
analysis to quantification risks and 
tax gaps.  
By Q4-2025:  

Step 1: Create a database and 
establish a control mechanism for 
increases exceeding 20% compared 
to the average costs of public 
institutions.  

Every year covered by the plan 
(2025-2031):  

Step 2: Conduct yearly thematic 
expenditure reviews and apply 
conclusions and recommendations 
in the budget planning process, in 
line with the established annual 

Restructuring the 
Public Spending 
System / Spending 
reviews  

[Adding to RRP 
milestones 
C8.R3.M202, 
C8.I5.0.M234, 
C13.R5.0.M392, 
and 
C14.R1.0.T403]   

Create a database on average costs of 
purchases and establish a control mechanism 
to monitor and address unjustified 
expenditure increases. This database also 
serves to centralise procurement of specific 
goods and services, reducing costs and 
introducing spending norms for public 
institutions.  

Conduct public expenditure reviews annually, 
setting mandatory savings targets and 
identifying measures to achieve them, in line 
with the spending reviews strategy timeline.  

Enhance the efficiency of public spending on 
standardised goods and services within the 

Step 1: Report by the 
authorities   

Step 2: Publication of 
two spending reviews 
per year on specific 
sectors or activities. 
Reviews include 
mandatory savings 
targets.  

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central public administration. In the 
healthcare system, implement centralised 
procurement of medical devices and 
consumables for the emergency system.  

schedule.  

Gradually, from Q4-2024 to Q2-
2030:  

Update and modernise the IT system used to 
develop and manage the national budget to 
achieve better management of budgetary data, 
increased budgetary transparency, improved 
monitoring and reporting. Additionally, 
increase the number of specialised staff 
involved in spending reviews. Review the 
legal framework to strengthen responsibilities 
of the Ministry of Finance and central and 
local public authorities to monitor the 
implementation of spending reviews.  

Step 3: Expand the categories of 
goods and services that will be 
procured centrally, focusing on 
priority sectors with high 
expenditure levels. Increase the 
share of procurement procedures 
awarded by ONAC, relative to all 
procurement procedures awarded 
by all contracting authorities in 
Romania, by an average of 0.25% 
per year over the next seven years.  

By Q4-2025:  

Step 4: Operationalise the 
specialised structure within the 
Ministry of Finance to monitor 
public expenditure systems using 
performance indicators and 
participate in specialised training 
courses organised with the support 
of the World Bank.  

By Q4-2025:  

Step 3: Report by the 
authorities, 
demonstrating the 
increase the share of 
procurement 
procedures awarded by 
ONAC.  

Step 4: Report by the 
authorities  

Business 
Financing Reform 
(new measure)  

Strengthen the administrative capacity of the 
Ministry of Investments and European 
Projects to allocate funds to support SMEs in 
the form of private equity, to foster long-term 
economic development, attract investors, and 
create jobs.  

Reform of the 
Expenditure 
System for state-
owned enterprises 
(new measure)  

Conducting diagnostic analyses of economic 
operators aimed at:  
•  Reducing 
payments.  

losses 

and 

overdue 

•  Updating  fees  charged  for  services 
performed  and  reducing  operational 
expenses,  leading  to  a  decrease  in 
subsidies/transfers  from 
the  state 
budget,  an  increase  in  net  profits, 
and  an  increase  in  state  budget 
revenues.   
Identify 
functional 
measures 
disposal.  
Introducing 
rules, 
especially for categories of expenses 
not directly related to the production 
process or service delivery.  

non-productive/non-
proposing 
assets, 
their  use  and/or 

expenditure 

for 

• 

• 

The reform should fully respect the principle 
of independence of state-owned enterprises 
and with the requirement for them to pursue 
profitability.  

Step 5: Establish a legal framework 
for implementing performance 
indicators at the level of central and 
local public authorities.  
By Q2-2026:  

Reform of the Institutional 
Framework for Allocating Funds to 
Support the Business Environment - 
Private Equity Investment Fund for 
SME Support.  

Step 5: Entry into force 
of the normative act by 
Q4-2025.  
Entry into force of the 
law operationalising 
the fund, along with 
specific legislation on 
grants, tax credits, and 
investment credits for 
the manufacturing 
industry.   

By Q3-2025:  

Step 1: Conducting a diagnostic 
analysis of the operational 
expenditure system, the revenue 
system, and the mechanisms for 
updating fees, as well as the subsidy 
system for economic operators.  

Step 1:  
Report by the 
authorities.  

By Q4-2025:  

Step 2: Establishing the regulatory 
framework to enhance the 
operational expenditure system, 
improve the management of public 
assets, introduce expenditure rules, 
and reduce dependence on the 
general government budget by Q4 
2025.   

Step 2:  

Entry into force of the 
regulatory framework.   

The reform should 
result in lower transfers 
from central and local 
governments to SoEs 
amounting to 0.25% of 
GDP for the entire 

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Taken together, these measures should result 
in lower transfers / subsidies from central and 
local governments to SOEs amounting to 
0.25% of GDP for the entire period of the 
plan.  

period of the plan 
(relative to the level in 
2023).  

Done at Strasbourg, 

For the Council 
The President 

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