Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Romania
Date: 2025-06-04
Institutions: European Commission, Reform and Investment Task Force
Subjects: Romania, budget policy, economic policy, economic recovery, economic reform, employment policy, energy policy, labour market, social policy, stability pact

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   EUROPEAN COMMISSION  Brussels, 4.6.2025  COM(2025) 223 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Romania {SWD(2025) 223 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the economic, social, employment, structural and budgetary policies 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(2) and Article 148(4) thereof, 

Having regard to 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 Regulation (EC) No 1466/971, and in particular 
Article 3(3) thereof, 

Having  regard  to  Regulation  (EU)  No  1176/2011  of  the  European  Parliament  and  of  the 
Council  of  16 November 2011  on  the  prevention  and  correction  of  macroeconomic 
imbalances2, and in particular Article 6(1) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

General considerations 

(1) 

Regulation (EU) 2024/1263, which entered into force on 30 April 2024, specifies the 
objectives  of  the  economic  governance  framework,  which  aims  at  promoting  sound 
and  sustainable  public  finances  and  sustainable  and  inclusive  growth  and  resilience 
through reforms and investments, and preventing excessive government deficits. The 
Regulation  stipulates  that  the  Council  and  the  Commission  conduct  multilateral 
surveillance in the context of the European Semester in accordance with the objectives 
and requirements set out in the TFEU. The European Semester includes, in particular, 
the  formulation,  and  the  surveillance  of  the  implementation  of  country-specific 
recommendations.  The  Regulation  also  promotes  national  ownership  of  fiscal  policy 
and  emphasises  its  medium-term  focus,  combined  with  more  effective  and  coherent 
enforcement. Each Member State must submit to  the Council and the Commission  a 
national  medium-term  fiscal-structural  plan,  containing  its  fiscal,  reform  and 
investment  commitments,  over  4  or  5  years,  depending  on  the  length  of the  national 

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2 

OJ L, 2024/1263, 30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1263/oj. 
OJ L 306, 23.11.2011, p. 25, ELI: http://data.europa.eu/eli/reg/2011/1176/oj. 

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legislative  term.  The  net  expenditure3  path  in  these  plans  has  to  comply  with  the 
Regulation’s  requirements,  including  the  requirements  to  put  or  keep  general 
government debt on a plausibly downward path by the end of the adjustment period, or 
for it to remain at prudent levels below 60% of gross domestic product (GDP), and to 
bring  and/or  maintain  the  general  government  deficit  below  the  3%-of-GDP  Treaty 
reference value over the medium term. Where a Member State commits to a relevant 
set  of  reforms  and  investments  in  accordance  with  the  criteria  set  out  in  the 
Regulation, the adjustment period may be extended by up to three years. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council4,  which 
established  the  Recovery  and  Resilience  Facility  (the  ‘RRF’),  entered  into  force  on 
19 February 2021.  The  RRF  provides  financial  support  to  Member  States  for 
implementing  reforms  and  investments,  delivering  a  fiscal  impulse  financed  by  the 
Union.  In  line  with  the  priorities  of  the  European  Semester  for  economic  policy 
coordination, the RRF fosters economic and social recovery while driving sustainable 
reforms and investments, in particular promoting the green and digital transitions and 
making  Member  States’  economies  more  resilient.  It  also  helps  strengthen  public 
finances  and  boost  growth  and  job  creation  in  the  medium  and  long  term,  improve 
territorial cohesion within the Union and support the continued implementation of the 
European Pillar of Social Rights. 
Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council5  (the 
‘REPowerEU  Regulation’),  which  was  adopted  on  27 February 2023,  aims  to  phase 
out the Union’s dependence on Russian fossil-fuel imports. This helps achieve energy 
security  and  diversify  the  Union’s  energy  supply,  while  increasing  the  uptake  of 
renewables,  energy  storage  capacities  and  energy  efficiency.  Romania  added  a  new 
REPowerEU chapter to its national recovery and resilience plan in order to finance key 
reforms and investments that will help achieve the REPowerEU objectives. 

On 31 May 2021, Romania submitted its national recovery and resilience plan to the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to Article 19 of that Regulation, the Commission assessed the relevance, effectiveness, 
efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in  accordance  with  the 
assessment guidelines set out in Annex V. On 29 October 2021, the Council adopted 
its  Implementing  Decision  approving  the  assessment  of  the  recovery  and  resilience 
plan for  Romania6, which was  amended under  Article 18(2) on  8 December 2023  to 
update  the  maximum  financial  contribution  for  non-repayable  financial  support,  as 

Net  expenditure  as  defined  in  Article  2,  point  (2),  of  Regulation  (EU)  2024/1263:  ‘net  expenditure’ 
means government expenditure net of (i) interest expenditure; (ii) discretionary revenue measures; (iii) 
expenditure  on  programmes  of  the  Union  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. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12 February 2021 
establishing 
(OJ  L  57,  18.2.2021,  p.  17,  ELI: 
http://data.europa.eu/eli/reg/2021/241/oj). 
Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27 February 2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No  1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1, ELI: http://data.europa. eu/eli/reg/2023/435/oj). 
Council Implementing Decision of 29 October 2021 on the approval of the assessment of the recovery 
and resilience plan for Romania (12319/21 + ADD1). 

the  Recovery  and  Resilience  Facility 

(2) 

(3) 

(4) 

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(5) 

(6) 

(7) 

well as to include the REPowerEU chapter7. The release of instalments is conditional 
on  the  adoption  of  a  decision  by  the  Commission,  in  accordance  with  Article  24(5), 
stating that Romania has satisfactorily achieved the relevant milestones and targets set 
out in the Council Implementing Decision. Satisfactory achievement requires that the 
achievement  of  preceding  milestones  and  targets  for  the  same  reform  or  investment 
has not been reversed. 

On  21  January  2025  the  Council,  upon  the  recommendation  of  the  Commission, 
adopted a recommendation endorsing the national medium-term fiscal-structural plan 
of Romania8. The plan was submitted in accordance with Articles 11 and 36(1), point 
(a)  of  Regulation  (EU)  2024/1263,  covers  the  period  from  2025  until  2028  and 
presents a fiscal adjustment spread over seven years. 

On  26  November  2024,  on  the  basis  of  Regulation  (EU)  No  1176/2011,  the 
Commission  adopted  the  2025  Alert  Mechanism  Report,  in  which  it  identified 
Romania as one of the Member States for which an in-depth review would be needed. 
The  Commission  also  adopted  a  recommendation  for  a  Council  recommendation  on 
the economic policy of the euro  area and  a proposal  for the 2025 Joint  Employment 
Report,  which  analyses  the  implementation  of  the  Employment  Guidelines  and  the 
principles  of  the  European  Pillar  of  Social  Rights.  The  Council  adopted  the 
Recommendation on the economic policy of the euro area9 on 13 May 2025 and the 
Joint Employment Report on 10 March 2025.  

On  29 January 2025,  the  Commission  published  the  Competitiveness  Compass,  a 
strategic framework that aims to boost the EU’s global competitiveness over the next 
five  years.  It  identifies  the  three  transformative  imperatives  of  sustainable  economic 
growth: (i) innovation; (ii) decarbonisation and competitiveness; and (iii) security. To 
close  the  innovation  gap,  the  EU  aims  to  foster  industrial  innovation,  support  the 
growth of start-ups through initiatives like the EU Start-up and Scale-up Strategy, and 
promote the adoption of advanced technologies like artificial intelligence and quantum 
computing.  In  pursuit  of  a  greener  economy,  the  Commission  has  outlined  a 
comprehensive Affordable Energy Action Plan and a Clean Industrial Deal, ensuring 
that  the  shift  to  clean  energy  remains  cost-effective,  competitiveness-friendly, 
particularly  for  energy-intensive  sectors,  and  is  a  driver  for  growth.  To  reduce 
excessive dependencies and increase security, the Union is committed to strengthening 
global  trade  partnerships,  diversifying  supply  chains  and  securing  access  to  critical 
raw materials and clean energy sources. These priorities are underpinned by horizontal 
enablers, namely regulatory simplification, deepening of the single market, financing 
competitiveness and a Savings and Investments Union, promotion of skills and quality 
jobs, and better coordination of EU policies. The Competitiveness Compass is aligned 
with  the  European  Semester,  ensuring  that  Member  States’  economic  policies  are 
consistent with the Commission’s strategic objectives, creating a unified approach to 
economic governance that fosters sustainable growth, innovation and resilience across 
the Union. 

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Council  Implementing  Decision  of  8  December  2023  amending  the  Implementing  Decision  of 
29 October  2021  on  the  approval  of  the  assessment  of  the  recovery  and  resilience  plan  for 
Romania (15833/23 + ADD1). 
Council  Recommendation  of  21  January  2025  endorsing  the  medium-term  fiscal-structural  plan  of 
Romania, OJ  
Council  Recommendation  of  13  May  2025  on  the  economic  policy  of  the  euro  area  (OJ  C, 
C/2025/2782, 22.5.2025, ELI: http:// data.europa.eu/eli/C/2025/2782/oj).)  

C/2025/647, 10.2.2025. 

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(8) 

In  2025,  the  European  Semester  for  economic  policy  coordination  continues  to 
develop  alongside  the  implementation  of  the  RRF.  The  full  implementation  of  the 
recovery and resilience plans remains essential for delivering on the policy priorities 
under the European Semester, as the plans help effectively address all or a significant 
subset  of  challenges  identified  in  the  relevant  country-specific  recommendations 
issued  in  recent  years.  These  country-specific  recommendations  remain  equally 
relevant  for  the  assessment  of  amended  recovery  and  resilience  plans  in  accordance 
with Article 21 of Regulation (EU) 2021/241. 

(9) 

the  key  economic  policy 
The  2025  country-specific  recommendations  cover 
challenges that are not sufficiently addressed by measures included in the recovery and 
resilience  plans,  taking  into  account  the  relevant  challenges  identified  in  the  2019-
2024 country-specific recommendations. 

(10)  On 4 June 2025, the Commission  published the 2025 country report for  Romania.  It 
assessed  Romania’s  progress 
relevant  country-specific 
in  addressing 
recommendations  and  took  stock  of  Romania’s  implementation  of  the  recovery  and 
resilience plan. Based on this analysis, the country report identified the most pressing 
challenges  Romania  is  facing.  It  also  assessed  Romania’s  progress  in  implementing 
the  European  Pillar  of  Social  Rights  and  in  achieving  the  Union  headline  targets  on 
employment, skills and poverty reduction, as well as progress in achieving the United 
Nations Sustainable Development Goals.  

the 

(11)  The  Commission  carried  out  an  in-depth  review  under  Article  5  of  Regulation  (EU) 
No  1176/2011  for  Romania.  The  main  findings  of  the  Commission’s  assessment  of 
macroeconomic vulnerabilities for Romania for the purposes of that Regulation were 
published  on  13  May  202510.  On  4  June  2025,  the  Commission  concluded  that 
Romania  is  experiencing  excessive  macroeconomic  imbalances.  In  particular, 
vulnerabilities  have  increased  as  Romania’s  twin  fiscal  and  current  account  deficits 
widened, and cost competitiveness deteriorated in 2024. The high government deficit 
increased  in  2024.  The  continued  growth  in  the  government  deficit,  in  particular  the 
increases in public sector wages and pensions, increased private consumption and the 
already large current account deficit. Unit labour costs accelerated further in 2024 after 
already  very  high  growth  rates  in  earlier  years,  which  eroded  cost  competitiveness. 
The soundness of the external financing mix, based on sizeable net FDI and EU funds 
that  had  contained  the  increase  of  external  debt,  weakened  in  2024.  Only  marginal 
reductions  are  expected  for  the  government  and  the  current  account  deficits  in  2025 
and 2026. ULC growth and inflation are set to decelerate but to remain large. Policy 
progress  was  minimal  in  2024  and  macroeconomic  stability  risks  widened.  Political 
uncertainty  increased  towards  the  end  of  last  year  leaving  the  country  vulnerable  to 
changes in investor sentiment and higher borrowing costs. The bank-sovereign nexus 
is  the  largest  in  the  EU  and  increased  further  in  2024.  A  significant  fiscal 
consolidation  package  adopted  at  end-2024,  including  a  freeze  of  pensions  and 
government  wages  is  yet  to  be  complemented  by  further  measures  to  ensure  full 
compliance  with  the  medium-term  fiscal-structural  plan  targets.  A  reform  of  the 
minimum  wage  setting  was  adopted  in  early  2025.  The  implementation  of  the 
medium-term  fiscal-structural  plan  and  a  tax  reform  in  2025,  could  significantly 
reduce  fiscal  vulnerabilities.  In  addition,  structural  reforms,  and  in  particular  those 
embedded in the RRP, are needed to strengthen competitiveness, export performance 

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SWD(2025) 126 final. 

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and  attract  further  EU  funding.  However,  additional  measures  are  likely  needed. 
Overall, without resolute action on both fiscal and structural reform levers, fiscal and 
external deficits are likely to remain too high, leaving Romania significantly exposed 
to changes in investor sentiment and exogenous shocks. 

Assessment of the Annual Progress Report 

(12)  On 21 January 2025, the Council recommended the following maximum growth rates 
of net expenditure for Romania: 5.1% in 2025, 4.9% in 2026, 4.7% in 2027, and 4.3% 
in  2028,  which  corresponds  to  the  maximum  cumulative  growth  rates  calculated  by 
reference  to  2023  of  20.2%  in  2025,  26.0%  in  2026,  31.9%  in  2027,  and  37.6%  in 
2028. In 2025-2030 these maximum growth rates of net expenditure coincide with the 
corrective  path 
in  accordance  with  Article  3(4)  of  Regulation  1467/97,  as 
recommended by the Council on 21 January 2025 with  a view to bringing an end to 
the  situation  of  an  excessive  deficit11.  Romania  has  not  yet  submitted  an  Annual 
Progress  Report  on  action  taken  in  response  to  the  Council  recommendation  of  21 
January 2025 with  a view to bringing an end to  the situation of an excessive deficit, 
the implementation of the set of reforms and investments underpinning the extension 
of  the  adjustment  period  and  the  implementation  of  reforms  and  investments 
responding  to  the  main  challenges  identified  in  the  European  Semester  country-
specific recommendations. 

(13)  Russia’s  war  of  aggression  against  Ukraine  and  its  repercussions  constitute  an 
existential  challenge  for  the  European  Union.  The  Commission  recommended  to 
activate the national  escape clause of the Stability and Growth Pact  in  a coordinated 
manner to support the EU efforts to achieve a rapid and significant increase in defence 
spending and this proposal was welcomed by the European Council of 6 March 2025. 

(14)  Based  on  data  validated  by  Eurostat12,  Romania’s  general  government  deficit 
increased from 6.6% of GDP in 2023 to 9.3% in 2024, while the general government 
debt  rose  from  48.9%  of  GDP  at  the  end  of  2023  to  54.8%  at  the  end  of  2024. 
According to the Commission’s calculations, these developments correspond to a net 
expenditure growth rate of 19.9% in 2024.  Based on the Commission’s estimates, the 
fiscal  stance13,  which  includes  both  nationally  and  EU  financed  expenditure,  was 
expansionary, by 0.8% of GDP, in 2024. 

(15)  The  Commission  Spring  2025  Forecast  projects  real  GDP  to  grow  by  1.4%  in  2025 
and 2.2% in 2026, and HICP inflation to stand at 5.1% in 2025 and 3.9% in 2026. 

(16)  The Commission Spring 2025 Forecast projects a government deficit of 8.6% of GDP 
in  2025.  The  projected  decline  in  the  deficit  in  2025  mainly  reflects  the 
implementation  of  a  fiscal  consolidation  package  at  the  end  of  2024.  This  package 
included  a  nominal  freeze  in  wages  and  pensions  and  some  additional  revenue-
enhancing measures. According to the Commission’s calculations, these developments 

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12 
13 

Council  Recommendation  with  a  view  to  bringing  an  end  to  the  situation  of  an  excessive  deficit  in 
Romania, C/2025/5038. 
Eurostat-Euro Indicators, 22.4.2025. 
The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of 
the  general  government.  It  aims  to  assess  the  economic  impulse  stemming  from  fiscal  policies,  both 
those  that  are  nationally  financed  and  those  that  are  financed  by  the  EU  budget.  The  fiscal  stance  is 
measured as the difference between (i) the medium-term potential growth and (ii) the change in primary 
expenditure net of discretionary revenue measures and including expenditure financed by non-repayable 
support (grants) from the Recovery and Resilience Facility and other Union funds. 

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correspond  to  net  expenditure  growth  of  5.4%  in  2025.  Based  on  the  Commission 
forecast,  the  fiscal  stance,  which  includes  both  nationally  and  EU  financed 
expenditure, is projected to be contractionary, by 1.4% of GDP, in 2025.The general 
government  debt-to-GDP  ratio  is  set  to  increase  to  59.4%  by  the  end  of  2025.  The 
increase of the debt-to-GDP ratio in 2025 mainly reflects the very high primary deficit 
and, to a lesser extent, an increase in interest payments.  

(17)  General  government  expenditure  amounting  to  0.9%  of  GDP  is  expected  to  be 
financed  by  non-repayable  support  (“grants”)  from  the  Recovery  and  Resilience 
Facility  in  2025,  compared  to  0.6%  of  GDP  in  2024,  according  to  the  Commission 
Spring  2025  Forecast.  Expenditure  financed  by  Recovery  and  Resilience  Facility 
grants enables high-quality investment and productivity-enhancing reforms without a 
direct impact on the general government balance and debt of Romania. 

(18)  General government defence expenditure amounted to 1.9% of GDP in 2021, 1.8% of 
GDP in 2022 and 1.7% of GDP in 202314. According to the Commission Spring 2025 
Forecast, expenditure on defence is projected at 1.7% of GDP in both 2024 and 2025. 
This corresponds to a decrease of 0.2 percentage points of GDP compared to 2021. 

(19)  On 21 October 2024, the Council recommended15 that Romania tighten fiscal policy in 
order to achieve a fiscal adjustment for 2024 as a whole. In 2024, the structural deficit 
in Romania increased by 2.4 percentage points of GDP to 8.8% of GDP. According to 
the  Commission  Spring  2025  Forecast,  net  expenditure  in  Romania  is  projected  to 
grow  by  5.4%  in  2025  and  26.4%  cumulatively  in  2024  and  2025.  Based  on  the 
Commission Spring 2025 Forecast, the net expenditure growth of Romania in 2025 is 
projected  to  be  above  the  recommended  maximum  growth  rate  established  by  the 
corrective path, in  annual and in  cumulative terms, corresponding to  a deviation16 of 
0.1% of GDP compared to the maximum recommended annual net expenditure growth 
in  2025,  and  a  deviation  of  1.7%  of  GDP  compared  to  the  maximum  recommended 
cumulative  net  expenditure  growth  in  2024  and  2025.  This  high  net  expenditure 
growth is due to high growth in current expenditure in 2024 (+18.7% relative to 2023), 
in  particular  on  the  public  sector  wage  bill  (+21.5%  relative  to  2023)  and  social 
transfers  including  pensions  (+19.5%  relative  to  2023).  The  projected  deviations  do 
not exceed the 0.3% of GDP threshold for annual deviations while they considerably 
exceed  the  0.6%  of  GDP  threshold  for  cumulative  deviations.  This  means  there  is  a 
high  risk  of  a  large  deviation  from  the  recommended  maximum  net  expenditure 
growth and a strong presumption of no effective action.  

(20)  Based on policy measures known at the cut-off date of the forecast, the Commission 
Spring  2025  Forecast  projects  a  government  deficit  of  8.4%  of  GDP  in  2026.  These 
developments correspond to net expenditure growth of 8.1% in 2026. The decrease of 
the  deficit  in  2026  mainly  reflects  an  improvement  in  government  revenue  growth, 
driven  by  the  projected  recovery  in  economic  activity.  Based  on  the  Commission’s 
estimates,  the  fiscal  stance,  which  includes  both  nationally  and  EU  financed 
expenditure, is projected to be broadly neutral in 2026. Fiscal consolidation could also 

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16 

Eurostat, government expenditure by classification of functions of government (COFOG).  

Council  Recommendation  of  21  October  2024  on  the  economic,  social,  employment,  structural  and 
budgetary policies of Romania, OJ C/2024/6830x, 29.11.2024. 

From  2026  these  figures  will  appear  in  the  control  account  that  is  established  in  Article  22  of  the 
Regulation (EU) 2024/1263. 

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contribute  to  improving  the  external  position.  The  general  government  debt-to-GDP 
ratio  is  projected  by  the  Commission  to  increase  to  63.3%  by  the  end  of  2026.  The 
increase of the debt-to-GDP ratio in 2026 mainly reflects the persistence of a very high 
primary deficit. 

(21)  The recommendation endorsing the medium-term plan of Romania specifies the set of 
reforms and investments underpinning the extension of the adjustment period, together 
with  a  timeline  for  their  implementation.  They  include  existing  and  stepped-up 
measures from the recovery and resilience plan, such as a comprehensive review of the 
tax  framework  covering  all  areas  of  taxation,  modernising  the  tax  administration 
system, annual spending reviews, a reform of both general and special pensions, and a 
new minimum wage setting mechanism, as well as additional reforms and investments 
such  as  measures  to  improve  business  financing  and  a  reform  of  the  expenditure 
system of state-owned enterprises.  Among the reforms and investments underpinning 
an extension that were due by the 30 April 2025, some were not implemented such as 
the key reform of the review of the tax system. 

(22) 

Key policy challenges 

In accordance with Article 19(3), point (b), of Regulation (EU) 2021/241 and criterion 
2.2  of  Annex  V  to  that  Regulation,  the  recovery  and  resilience  plan  includes  an 
extensive set  of mutually reinforcing  reforms and investments  to  be implemented by 
2026.  These  are  expected  to  help  effectively  address  all  or  a  significant  subset  of 
challenges  identified  in  the  relevant  country-specific  recommendations.  Within  this 
tight timeframe, finalising the effective implementation of the recovery and resilience 
plan  including  the  REPowerEU  chapter,  is  essential  to  boost  Romania’s  long-term 
competitiveness  through  the  green  and  digital  transitions,  while  ensuring  social 
fairness. To deliver on the commitments of the recovery and resilience plan by August 
2026, it is essential for Romania to urgently accelerate the implementation of reforms 
and  investments  by  tackling  procurement  delays,  ensuring  effective  governance  and 
strengthening  administrative  capacity.  To  facilitate  this  process,  Romania  needs  to 
amend  the  plan  and  remove  investments  no  longer  achievable  due  to  objective 
circumstances,  while safeguarding the grant  component. The systematic involvement 
of  local  and  regional  authorities,  social  partners,  civil  society  and  other  relevant 
stakeholders  remains  essential  in  order  to  ensure  broad  ownership  for  the  successful 
implementation of the recovery and resilience plan. 

(23)  The implementation  of cohesion  policy programmes,  which encompass support from 
the  European  Regional  Development  Fund  (ERDF),  the  Just  Transition  Fund  (JTF), 
the European Social Fund Plus (ESF+) and the Cohesion Fund (CF), has accelerated in 
Romania.  It  is  important  to  continue  efforts  to  ensure  the  swift  implementation  of 
these programmes, while maximising their impact on the ground. Romania is already 
taking  action  under  its  cohesion  policy  programmes  to  boost  competitiveness  and 
growth.  At  the  same  time,  Romania  continues  to  face  challenges,  including  those 
related  to  education,  employment  and  social  inclusion,  as  well  as  boosting  regional 
competitiveness  through  research  and  innovation,  including  by  developing  or 
manufacturing critical technologies, increasing water resilience, especially in the east 
and south of the country and the affordability of housing. In accordance with Article 
18  of  Regulation  (EU)  2021/1060,  Romania  is  required  –  as  part  of  the  mid-term 
review of the cohesion policy funds – to review each programme taking into account, 
the  2024  country-specific 
among  other 

the  challenges 

identified 

things, 

in 

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recommendations.  The  Commission  proposals  adopted  on  1  April  202517  extend  the 
deadline for submitting an assessment – for each programme  – of the outcome of the 
mid-term review beyond 31 March 2025. It also provides flexibilities to help speed up 
programme  implementation  and  incentives  for  Member  States  to  allocate  cohesion 
policy resources to five strategic priority areas of the Union, namely competitiveness 
in strategic technologies, defence, housing, water resilience and energy transition. 

(24)  The  Strategic  Technologies  for  Europe  Platform  (STEP)  provides  the  opportunity  to 
invest in a key EU strategic priority by strengthening the EU’s competitiveness. STEP 
is channelled through 11 existing EU funds. Member States can also contribute to the 
InvestEU  programme  supporting  investments  in  priority  areas.  Romania  could  use 
these initiatives to support the development or manufacturing of critical technologies, 
including clean and resource-efficient technologies. 

(25)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan  and  other  EU  funds,  Romania  faces  several  additional  challenges  related  to  the 
decarbonisation of the economy and energy production, preparation and prioritisation 
of large projects, quality and effectiveness of public administration, social protection 
and  access  to  essential  services,  labour  market  participation  and  skills  shortages, 
poverty and social exclusion.  

(26)  As  set  in  the  Competitiveness  Compass,  all  the  EU,  national,  and  local  institutions 
must  make  a  major  effort  to  produce  simpler  rules  and  to  accelerate  the  speed  of 
administrative  procedures.  The  Commission  has  set  ambitious  goals  for  reducing 
administrative burden: by at least 25% and by at least 35% for SMEs; and has created 
new  tools  to  achieve  these  goals,  including  systematic  stress  test  of  the  stock  of  EU 
legislation  and  enhanced  stakeholders’  dialogue.  To  match  this  ambition,  Romania 
also needs to take action. 82% of businesses consider the complexity of administrative 
procedures to be a problem for their company when doing business in Romania18. The 
predictability  of  decision-making  remains  a  challenge,  as  it  negatively  affects  the 
business  environment.  The  number  of  emergency  ordinances19  issued  remains  high, 
generating  uncertainty  and  likely  hampering  investment.  Despite  the  established 
institutional  framework  for  consultation,  the  involvement  of  relevant  stakeholders  in 
designing and implementing reforms is weak, and genuine dialogue rarely takes place, 
though  some  steps  have  recently  been  taken  to  improve  the  effectiveness  of 
consultations.  Regulatory  impact  assessments  continue  to  be  a  formality,  while  their 
quality  is  questionable  and  their  actual  use  is  uncertain.  Swiftly  implementing  the 
reforms  in  the  recovery  and  resilience  plan  that  aim  to  strengthen  the  capacity  for 
policy  coordination  and  impact  analysis  at  all  government  levels,  and  increase  the 
quality of public consultations would help improve economic and social outcomes. 

17 

18 
19 

Proposal  for  a  REGULATION  OF  THE  EUROPEAN  PARLIAMENT  AND  OF  THE  COUNCIL 
amending  Regulations  (EU)  2021/1058  and  (EU)  2021/1056  as  regards  specific  measures  to  address 
strategic challenges in the context of the mid-term review - COM(2025) 123 final. 
‘Businesses' attitudes towards corruption in the EU’ Flash Report, Eurobarometer Report (April 2024). 
Government Emergency Ordinances are  legislative acts having the legal force of a  law. According to 
Article 115 of the Constitution of Romania, the Government can adopt emergency ordinances only in 
exceptional  situations  requiring  their  adoption  without  delay,  having  the  obligation  to  motivate  the 
urgency. The emergency ordinances enter into force after their submission for debate to the competent 
Chamber of the Parliament and after their publication in the Official Journal. Subsequently, they need to 
be approved by law in the Parliament, but  they start producing legal effects on the date of their entry 
into force. 

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(27)  Despite Romania making some progress, with RRF support, in increasing the share of 
renewables in its energy mix, the country’s energy system still relies heavily on fossil 
fuels,  which  make  up  about  70%  of  its  energy  mix.  Phasing  out  coal  and  limiting 
natural  gas  use  by  replacing  them  with  cleaner  alternatives,  especially  renewables, 
would improve Romania’s air quality, cut CO₂ emissions, and shield its economy from 
fossil-fuel price shocks, as well as reduce its dependences and step up energy security. 
Given Romania’s significant yet underused potential for renewable energy (wind and 
solar), accelerating  their roll-out could  support  the  country's commitment to  increase 
the renewable energy share in total energy consumption to 38% by 2030, which is out 
of reach with  current  policies. Romania still  faces multiple barriers  to  the roll-out  of 
renewables  –  from  price  uncertainty  to  cumbersome  permitting  and  unclear  land-use 
rules.  In  particular,  implementing  the  2024  Offshore  Wind  Law  could  add  3-7 
gigawatts  of  electricity  by  2030,  while  additional  regulatory  reforms,  also  in  the 
recovery  and  resilience  plan,  to  simplify  and  speed  up  permitting  procedures  could 
remove the barriers to the roll-out of renewables. These efforts would allow Romania 
to  meet  its  2030  climate  commitments,  creating  jobs  and  providing  households  and 
industry with more affordable energy. 

(28) 

Increasing  the  share  of  renewables  requires  significant  improvements  to  be  made  to 
Romania’s  power  grids,  which  currently  cannot  accommodate  a  large  expansion  of 
wind  and  solar  generation20.  Insufficient 
transmission  capacity  and  outdated 
infrastructure  lead  to  congestion,  curtailment  of  renewable  output  during  peak 
production,  and  difficulties  in  connecting  new  projects.  Romania’s  energy  strategy 
intends  to  address  these  problems,  calling  for  the  electricity  grid  (both  transmission 
and distribution) to be modernised and digitalised using smart technologies and energy 
storage.  This  would  also  improve  energy  security,  as  a  robust  grid  can  better  handle 
demand spikes or supply shocks. A stronger national grid could be complemented by 
stronger links with neighbouring countries (such as Hungary, Bulgaria, Moldova, and 
Ukraine).  Projects  like  the  new  Black  Sea  HVDC  interconnector  (linking  Romania’s 
Black Sea coast to Central Europe) could increase cross-border flow and enable future 
offshore  wind  exports.  Improving  cross-border  electricity  interconnections  could 
better integrate Romania into the European energy market and increase the stability of 
its power system, while stepping up energy security. 

(29)  During  the  recent  energy  crisis,  Romania  introduced  emergency  measures,  such  as 
price  caps  and  extensive  subsidies  to  electricity  and  gas  to  shield  households  and 
businesses from soaring energy prices. While these interventions provided short-term 
relief and protected vulnerable consumers they came at a high fiscal cost and created 
market  distortions.  Blanket  price  caps  send  the  wrong  signals  to  the  market, 
discouraging  energy saving  and investment  in  efficiency or new  capacity.  As energy 
prices  have  stabilised,  it  is  crucial  to  phase  out  these  emergency  support  schemes. 
Romania  sizeable  relevant  fossil-fuel  subsidies  without  a  planned  phase  out  before 
2030.  In  particular,  fossil-fuel  subsidies  that  address  neither  energy  poverty  in  a 
targeted way nor genuine energy security concerns, hinder electrification and are not 
crucial  for  industrial  competitiveness  could  be  considered  a  phase-out  priority.  In 
Romania, fossil-fuel subsidies such as support for heating supplied to households and 
to cover the losses incurred by fossil-fuel companies are economically inefficient and 
prolong  reliance  on  fossil  fuels.  By  contrast,  Romania  would  benefit  by  using  the 
savings to help  address the unsustainably high general government deficit. Restoring 

20 

See for example OECD Economic Surveys: Romania 2024. 

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(30) 

undistorted  energy  prices  could  encourage  investment  in  renewable  energy  and 
efficiency, stepping up Romania’s clean energy transition.  

Investments  in  energy  efficiency  (renovating  buildings  for  better  insulation  and 
upgrading heating systems), environmental infrastructure (modernising district heating 
networks,  improving  waste  and  water  systems,  and  remediating  industrial  areas 
affected by pollution) and net zero technologies (developing new industries like solar 
panel  components,  battery  assembly,  or  even  hydrogen  projects)  are  complementary 
measures  to  Romania’s  supply-side  reforms.  These  aim  to  ensure  that  the  energy 
transition  is  cost-effective  and  inclusive  across  regions,  particularly  coal-dependent 
regions, to enable a fair transition.  

(31)  Romania’s  infrastructure,  particularly  that  related  to  sustainable  transport,  clean 
energy,  and  environmental  and  digital  services,  still  requires  significant  investments 
despite the sizeable support provided by cohesion policy, the RRF and other EU funds. 
In  many  instances,  even  mature  projects  are  facing  delays  and  large  projects  are  not 
always  getting  the  required  priority  to  advance  on  schedule.  Addressing  these 
shortcomings would step up planning security and enable projects to be carried out in 
a timely manner, which often help enable complementary private investments. Quality 
and effectiveness of public administration needs to be further improved. Applying and, 
if needed, further improving the framework for strategic and budgetary planning that 
was  introduced  with  the  recovery  and  resilience  plan  would  support  the  country’s 
long-term development, as well as the prioritisation of actions and policy coordination 
at  central  and  local  level.  In  particular,  the  sectoral  strategic  framework  seems  to  be 
still fragmented, with overlaps across sectors and no clear setting of priorities. 

(32)  Women’s  participation  in  Romania’s  labour  market  remains  below  the  EU  average 
(60.3% vs 70.8% EU). In addition, young people face high levels of unemployment as 
Romania has the third-highest unemployment rate for young people in the EU (23.9% 
vs 14.9% EU) and the highest rate of young people not in education, employment or 
training  in  the  EU  (19.4%  vs  11%  EU).  Improving  their  respective  position  and 
increasing  their  participation  in  the  labour  market  could  partially  counteract  adverse 
demographics,  as  well  as  provide  women  and  young  people  with  additional 
opportunities. Addressing challenges related to activation measures and access to early 
childhood  education  and  care,  especially  in  rural  areas,  would  be  important  in  that 
respect. In 2024, only 11.4% of children aged 0-3 were enrolled in formal childcare, 
well below the EU average of 39.2%, and only 75.7% (EU: 94.6%) of children aged 3 
to  compulsory  primary  education  were  taking  part  in  early  childhood  education  and 
care  in  2022.  Romania  could  consider  a  better  targeting  of  labour  market  activation 
measures  and  redirecting  support  away  from  less  effective  employment  subsidies 
towards training and outreach. 

(33)  While job vacancy rates remain low, Romania is among the Member States with the 
highest  number  of  occupations  with  staff  shortages.  Employers  identify  the  lack  of 
appropriate  skills  within  the  workforce  as  one  of  their  main  business  constraints. 
Tertiary educational attainment and the share of the adult population with at least basic 
digital  skills  remain  stagnant  at  low  levels,  hampering  competitiveness.  Given  the 
projected  decline  in  Romania’s  working-age  population,  skills  shortages  may  get 
worse  without  improved  policies  for  helping  people  find  work,  upskilling  and 
retaining talent. The effectiveness of upskilling and reskilling is hampered by the lack 
of basic skills, reflected by the poor results from the 2022 Programme for International 
Student Assessment (PISA). Romania has one of the highest rates of 15-year-olds in 
the EU that lack a basic level  of proficiency in  mathematics (48.6% vs  EU:  29.5%), 

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reading  (41.7%  vs  EU:  26.2%)  and  science  (44%  vs  EU:  24.2%).  Romania  is 
modernising  the  vocational  education  and  training  system  to  meet  the  needs  of  the 
labour market, but only  a minority of students benefit from work-based learning and 
employment rates of recent graduates are low. To make education, vocational training 
and  lifelong  learning  more  relevant  to  the  labour  market,  it  is  important  to  better 
involve local firms in training provision and to better translate skills intelligence into 
evidence-based policymaking and adapted curricula and training offer. 

(34)  Despite recent progress, Romania continues to have one of the highest rates for adults 
and children at risk of poverty or social exclusion in the EU (27.9%, vs an EU average 
of 21.0%) and a social protection system with a low level of adequacy and coverage. 
Romania needs focused efforts to make progress in reducing the number of people at 
risk of poverty or social exclusion by 2030. This could be achieved through boosting 
the  efficiency  of  the  social  protection  system,  ensuring  stable  funding,  effective 
monitoring and impact evaluation and better access to essential and enabling services, 
including  for  Roma  communities.  Ensuring  increased  access  to  quality  healthcare 
remains a challenge, particularly in rural areas and for vulnerable groups. Shortages of 
qualified  staff  limit  the  availability  of  healthcare  and  long-term  care  services.  EU-
funded  programmes  provide  considerable  support,  including  through  the  2 000 
integrated  community  services  that  will  be  established  in  rural  areas  and  the 
strengthening of social, health educational and employment services. Addressing these 
challenges  would  also  help  support  upward  social  convergence,  consistent  with  the 
Commission’s  second-stage  country  analysis  in  line  with  the  Social  Convergence 
Framework21. 

(35) 

In light of the Commission’s in-depth review and its conclusions on the existence of 
excessive  imbalances,  recommendations  under  Article  6  of  Regulation  (EU)  No 
1176/2011  are  reflected  in  recommendation  (1)  and  (2).  Policies  referred  to  in 
recommendation (1) and (2) help to address vulnerabilities linked to large external and 
fiscal deficits. 

HEREBY RECOMMENDS that Romania take action in 2025 and 2026 to:  

1. 

2. 

Reinforce overall defence spending and readiness in line with the European Council 
conclusions  of  6  March  2025.  Considerably  tighten  fiscal  policy  to  ensure  that  net 
expenditure  stays  within  the  corrective  path  under  the  Excessive  Deficit  Procedure 
and  to  bolster  the  external  position.  Implement  the  set  of  reforms  and  investments 
underpinning the extended adjustment period as recommended by the Council on 21 
January 2025.  

(EU)  2021/241,  urgently 

In  view  of  the  applicable  deadlines  for  the  timely  completion  of  reforms  and 
investments  under  Regulation 
the 
implementation  of  the  recovery  and  resilience  plan,  including  the  REPowerEU 
chapter. Accelerate the implementation of the cohesion policy programmes (ERDF, 
JTF,  ESF+,  CF),  building,  where  appropriate,  on  the  opportunities  offered  by  the 
mid-term  review. Make  optimal use of EU instruments,  including  the opportunities 
provided  by  the  InvestEU  and  the  Strategic  Technologies  for  Europe  Platform,  to 
improve competitiveness. 

accelerate 

21 

SWD(2025)95  –  Second-stage  country  analysis  on  social  convergence  in  line  with  the  Social 
Convergence Framework (SCF), 2025. 

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3. 

4. 

5. 

6. 

Improve the quality and effectiveness of public administration and the predictability 
of decision-making, while ensuring that legislative initiatives do not undermine legal 
certainty through appropriate stakeholder consultations, effective impact assessments 
and  streamlined  administrative  procedures.  Better  prepare  and  prioritise  large 
infrastructure  projects  and  accelerate  their  implementation,  ensure  mature  public 
investment  projects  are  carried  out  in  a  timely  manner,  and  promote  private 
investment to foster sustainable economic development. 

Reduce the reliance on fossil fuels by speeding up the roll-out of renewable energy, 
improve  grid  capacity,  strengthen  cross-border  electricity  connections,  advance 
regulatory reforms that de-risk clean energy projects, and improve transparency and 
efficiency in the permitting process. Reduce the reliance on fossil fuels, in particular 
by  phasing  out  fossil-fuel  subsidies  in  the  heating  sector  and  invest  in  energy 
efficiency, environmental infrastructure and innovation, taking into account regional 
disparities such as the impact on the coal regions. Wind down the emergency energy 
support measures in force, using the related savings to reduce the government deficit.  

Strengthen  labour  market  participation  of  women  and  young  people  through 
improving  effectiveness  of  active  labour  market  policies  and  participation  in  early 
childhood  education  and  care.  Tackle  skills  shortages  by  boosting  basic  skills  and 
labour  market  relevant  skills  of  the  workforce,  as  well  as  improving  stakeholder 
engagement  and  making  best  use  of  skills  intelligence  in  education  and  skills 
policies. 

Reduce  poverty  and  social  exclusion  risks  by  extending  social  protection  and 
improving its effectiveness,  including  through better access  to quality  essential  and 
enabling services, focusing on integrated social, health, educational and employment 
services, in particular for Roma and other disadvantaged groups, while maintaining 
fiscal sustainability. 

Done at Brussels, 

For the Council 
The President 

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