Recommendation for a COUNCIL RECOMMENDATION with a view to bringing an end to the situation of an excessive deficit in Romania
Date: 2024-11-26
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Romania, budget deficit, budgetary control, economic policy, economic reform, gross domestic product, public debt, public finance, stability pact

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   EUROPEAN COMMISSION  Brussels, 26.11.2024  COM(2024) 957 final  Recommendation for a COUNCIL RECOMMENDATION with a view to bringing an end to the situation of an excessive deficit in Romania  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

with a view to bringing an end to the situation of an excessive deficit in Romania 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union  (TFEU),  and  in 
particular Article 126(7) thereof, 

Having regard to the recommendation from the Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

According  to  Article  126  of  the  TFEU,  Member  States  shall  avoid  excessive 
government deficits. 

The Stability and Growth Pact is based on the objective of sound government finances 
as  a  means  of  strengthening  the  conditions  for  price  stability  and  for  strong, 
sustainable and inclusive growth underpinned by financial stability, thereby supporting 
the achievement of the Union’s objectives for sustainable growth and employment. 

On  30  April  2024,  the  EU’s  reformed  economic  governance  framework  entered  into 
force.  The  framework  includes  Regulation  (EU)  2024/12631  of  29 April 2024  on  the 
effective  coordination  of  economic  policies  and  multilateral  budgetary  surveillance 
and  repealing  Council  Regulation  (EC)  No  1466/97.  It  also  includes  Council 
Regulation  (EU)  2024/1264  amending  Council  Regulation  (EC)  No  1467/972  on 
speeding  up  and  clarifying  the  implementation  of  the  excessive  deficit  procedure,  as 
well  as  Council  Directive  (EU)  2024/12653  of  29  April  2024  amending  Directive 
2011/85/EU on requirements for budgetary frameworks of the Member States. 

Romania  has  been  subject  to  an  excessive  deficit  procedure  since  April  2020.  On  3 
April 2020, the Council, acting upon a recommendation by the Commission, adopted 
Decision (EU) 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 
latest4. 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 until 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 

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OJ L, 30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1263/oj. 
OJ L 209, 2.8.1997, ELI: http://data.europa.eu/eli/reg/1997/1467/2024-04-30.  
OJ L, 30.4.2024, ELI: http://data.europa.eu/eli/dir/2024/1265/oj. 
All documents related to the excessive deficit procedure of Romania can be found at:  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. 

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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  adopted  a  Decision  under  Article  126(8)  TFEU  on  the  absence  of 
effective action5.  

In  case  of  non-effective  action  by  a  Member  State,  Article  126  TFEU  requires  the 
Council to adopt a revised recommendation addressed to the Member State concerned 
with  a  view  to  bringing  the  situation  of  excessive  deficit  to  an  end  within  a  given 
period.  In  line  with  Article  3(4)  of  Council  Regulation  (EC)  1467/97,  that 
recommendation is also  to establish a maximum deadline of six months for effective 
action  to  be  taken  by  the  Member  State  concerned  to  correct  the  excessive  deficit, 
which  can  be  reduced  to  three  months  when  warranted  by  the  seriousness  of  the 
situation.  Furthermore,  in  its  recommendation,  the  Council  is  to  request  that  the 
Member  State  implements  a  corrective  net  expenditure6  path,  which  ensures  that  the 
general government deficit is brought and maintained below the 3% of GDP reference 
value  within  the  deadline  set  in  that  recommendation.  Where  the  excessive  deficit 
procedure  was  opened  on  the  basis  of  the  deficit  criterion,  the  corrective  net 
expenditure path is to be consistent with a minimum annual structural adjustment of at 
least 0.5% GDP as a benchmark for the years when the general government deficit is 
expected  to  exceed  the  reference  value.  The  Commission  may,  during  a  transition 
period in 2025, 2026, and 2027, adjust the benchmark to take into account the increase 
in interest payments when setting the proposed corrective path for those years, taking 
into account recital 23 of Council Regulation (EU) 2024/1264.  

The  Council  Decision  of  26  July  2024  took  into  account  that  the  next  step  in  the 
excessive  deficit  procedure,  namely  a  revised  Commission  recommendation  for  a 
Council  recommendation  under  Article  126(7) TFEU  on  the  correction  of  the 
excessive deficit, would take place after the submission of the national medium-term 
fiscal-structural plan in accordance with Articles 11 and 36(1), point (a) of Regulation 
(EU)  2024/1263.  This  approach  allows  to  ensure  consistency  between  the  budgetary 
requirements under the excessive deficit procedure and the adjustment path set out in 
the medium-term fiscal-structural plan. This timeline is exceptional and linked to the 
transition to the new framework, therefore not setting a precedent. 

Real  GDP  in  Romania  expanded  by  2.4%  in  2023.  According  to  the  European 
Commission  Autumn  2024  Forecast,  the  economy  is  expected  to  grow  by  1.4%  in 
2024, with strong domestic demand offset by a negative contribution from net exports. 
In  2025,  real  GDP  is  expected  to  increase  by  2.5%,  driven  by  a  gradual  pick-up  in 
external  demand  and  exports,  further  easing  of  financial  conditions,  resilient  private 
consumption,  an  acceleration  in  private  investment,  and  support  from  EU-funded 
investment  in  public  infrastructure.  The  unemployment  rate  is  projected  to  remain 
stable  at  5.5%  in  2024  and  2025.  Inflation  is  set  to  decrease  from  9.7%  in  2023  to 
5.5% in 2024, and then to 3.9% in 2025. 

OJ L, 1.8.2024, ELI: https://eur-lex.europa.eu/eli/dec/2024/2130/oj. 
According  to  Article  2(2)  of  Regulation  (EU)  2024/1263,  'net  expenditure'  means  government 
expenditure net of interest expenditure, discretionary revenue measures, expenditure on programmes of 
the  Union  fully  matched  by  revenue  from  Union  funds,  national  expenditure  on  co-financing  of 
programmes funded by the Union, cyclical elements of unemployment benefit expenditure, and one-offs 
and other temporary measures. 

(5) 

(6) 

(7) 

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(8) 

(9) 

According  to  the  data  validated  by  Eurostat  on  22  October  20247,  the  general 
government  deficit  in  Romania  stood  at  6.5%  of  GDP  in  2023.  The  European 
Commission Autumn 2024 Forecast projects a general government deficit of 8.0% of 
GDP in 2024 and 7.9% of GDP in 2025, thus above the reference value in both years. 
The structural deficit is projected at 7.4% of GDP in 2024 and is expected to remain 
roughly unchanged in 2025.  

General  government  debt  stood  at  48.9%  of  GDP  at  end-2023.  According  to  the 
European Commission Autumn 2024 Forecast, it is projected to increase to 52.2% of 
GDP at end-2024 and 56.1% of GDP at end-2025, thus remaining below the 60% of 
GDP reference value. 

(10)  On  25  October  2024,  Romania  submitted  its  first  national  medium-term  fiscal-
structural plan, in accordance with Articles 11 and 36(1), point (a) of Regulation (EU) 
2024/1263.  The  plan  covers  the  period  2025-2031  and  presents  a  fiscal  adjustment 
spread  over  seven  years.  The  Council  Recommendation  endorsing  the  national 
medium-term  fiscal-structural  plan  of  Romania  for  the  years  2025  to  2031  and 
endorsing a set of reforms and investment  commitments in the plan underpinning an 
extension of the adjustment period recommends a net expenditure path that factors in 
all the necessary requirements of a corrective path and should be recommended as the 
corrective net  expenditure path  under the excessive deficit procedure. The corrective 
net expenditure path is thus consistent with a minimum annual structural adjustment of 
at least 0.5% GDP as a benchmark for the years when the general government deficit 
is  expected  to  exceed  the  reference  value,  in  line  with  Council  Regulation  (EC) 
1467/97. 

(11)  Based  on  the  net  expenditure  path,  as  the  sole  operational  reference  for  monitoring 
compliance,  which  is  set  out  in  the  Council  Recommendation  endorsing  the  plan  of 
Romania,  and  in  this  recommendation,  and  based  on  the  European  Commission 
medium-term  government  debt  projection  framework  and  the  European  Commission 
Autumn  2024  Forecast,  the  general  government  deficit  is  expected  to  decrease  from 
8.0%  of  GDP  in  2024  to  2.9%  by  2030.  However,  based  on  the  assumptions  of  the 
plan, the deficit would go below the 3% deficit reference value only in 2031.  

(12)  Based  on  the  corrective  net  expenditure  path  to  be  recommended,  the  European 
Commission medium-term government debt projection framework, and the European 
Commission  Autumn  2024  Forecast,  the  general  government  debt  would  increase 
from 52.2% of GDP at end-2024 to 59.4% in 2030. 

(13)  Budgetary consolidation measures should secure a lasting correction of the excessive 
deficit,  while  being  geared  towards  enhancing  the  quality  and  composition  of  the 
public  finances,  preserving  investment  and  reinforcing  the  growth  potential  of  the 
economy.  Reforms  of  a  fiscal  and  broader  economic  nature  (including  the  reforms 
underpinning  the  extension  of  the  adjustment  period,  as  specified  in  Annex II  of  the 
Commission Recommendation for a Council Recommendation endorsing the medium-
term  plan  of  Romania8)  should  improve  the  growth  and  resilience  potential  of  the 
economy in a sustainable manner and support fiscal sustainability. 

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Euro 

Indicators 

Eurostat 
https://ec.europa.eu/eurostat/en/web/products-euro-indicators/w/2-22102024-ap 
Commission  Recommendation  for  a  Council  Recommendation  endorsing  the  national  medium-term 
fiscal-structural plan of Romania, 26.11.2024, COM(2024)725 final. 

published 

October 

2024. 

See: 

22 

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HEREBY RECOMMENDS: 

(1) 

(2) 

(3) 

Romania  should  ensure  that  the  nominal  growth  rate  of  net  expenditure  does  not 
exceed the maxima established in Annex I.  

Romania should thus put an end to the excessive deficit situation by 2030. 

The Council establishes the deadline of 30 April 2025 for Romania to take effective 
action  and  present  the  necessary  measures  together  with  its  2025  annual  progress 
report,  to  be  submitted  to  the  Commission  in  accordance  with  Article  21  of 
Regulation (EU) 2024/1263. Thereafter, Romania should report on progress made in 
the  implementation  of  this  recommendation  at  least  every  six  months  until  the 
excessive deficit has been corrected. 

This Recommendation is addressed to Romania.  

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

Years 

2025 

2026 

2027 

2028 

2029 

2030 

Growth rates 

Annual 

5.1 

4.9 

4.7 

4.3 

4.2 

3.9 

(%) 

Cumulative (*) 

20.2 

26.0 

31.9 

37.6 

43.3 

49.0 

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

Done at Brussels, 

For the Council 
The President 

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