Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Romania
Date: 2026-06-03
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, 3.6.2026  COM(2026) 223 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Romania {SWD(2026) 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  1466/97  (1),  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 
imbalances (2), 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: 

(1) 

1 

2 

Regulation  (EU)  2024/1263  specifies  the  objectives  of  the  economic  governance 
framework,  which  aims  at  promoting  sound  and  sustainable  public  finances, 
sustainable  and  inclusive  growth  and  resilience  through  reforms  and  investments,  as 
well  as  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 
Treaty  on  the  Functioning  of  the  European  Union (TFEU).  The  European  Semester 
includes, in  particular, the formulation and the surveillance of the implementation  of 
country-specific recommendations. 

Regulation 

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 
30.4.2024, 
1466/97 
ELI: http://data.europa.eu/eli/reg/2024/1263/oj). 
Regulation (EU) No 1176/2011 of the European Parliament and of the  Council of 16 November 2011 
imbalances  (OJ  L  306,  23.11.2011, 
on 
ELI: http://data.europa.eu/eli/reg/2011/1176/oj). 

the  prevention  and  correction  of  macroeconomic 

2024/1263, 

(EC) 

(OJ 

No 

L, 

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(2) 

(3) 

(4) 

(5) 

On  16 July 2025,  the  Commission  adopted  its  proposal  for  a  regulation  establishing 
the European Fund for economic, social and territorial cohesion, agriculture and rural, 
fisheries and maritime, prosperity and security for the period 2028-2034 and amending 
Regulation (EU) 2023/955 and Regulation (EU, Euratom) 2024/2509 (3). The proposal 
aims to increase the effectiveness of Union funding by reducing the fragmentation of 
the  financial  architecture  and  to  support  Member  States  in  the  coordination  of  their 
economic policy in line with Article 175 TFEU (4). 

On  25 November 2025,  on  the  basis  of  Regulation  (EU)  No  1176/2011,  the 
Commission  adopted  the  2026  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 
human capital in the European Union, and a proposal for the 2026 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  Joint 
Employment Report, and the Recommendation on human capital on 9 March 2026.  

On  29 January 2025,  the  Commission  published  the  Competitiveness  Compass,  a 
strategic  framework  that  aims  to  boost  the  Union’s  global  competitiveness  over  the 
next  five  years.  It  identifies  the  three  transformational  imperatives  of  innovation, 
decarbonisation  and  competitiveness,  and  security  as  critical  pillars  for  sustainable 
economic  growth.  The  European  Semester  is  aligned  with  the  Competitiveness 
Compass,  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. 

In  2026,  the  European  Semester  for  economic  policy  coordination  continues  to 
develop  alongside  the  final  stage  of  Recovery  and  Resilience  Facility  (RRF) 
implementation (5). Recovery and resilience plans (RRPs), along with cohesion policy 
funding, have been essential for delivering on the policy priorities under the European 
Semester, as the plans were required to effectively address all or a significant subset of 
challenges identified in the relevant country-specific recommendations issued in recent 
cycles, and programmes funded by the European cohesion policy were required to take 
country-specific recommendations into account. As the RRF approaches the end of its 
lifetime,  it  remains  essential  to  sustain  the  reforms  and  investments  supported  and 
implemented  under  the  RRF,  in  particular  those  that  contribute  to  addressing 
challenges identified in the country-specific recommendations. 

(6) 

On  3 June 2026,  the  Commission  published  the  2026  country  report  for  Romania.  It 
relevant  country-specific 
in  addressing 
assessed  Romania’s  progress 

the 

3 

4 

5 

Proposal for a Regulation of the European Parliament and of the Council establishing the European Fund for 
economic,  social  and  territorial  cohesion,  agriculture  and  rural,  fisheries  and  maritime,  prosperity  and 
security for the period 2028-2034 and amending Regulation (EU) 2023/955 and Regulation (EU, Euratom) 
2024/2509 - COM(2025) 565 final. The proposed Regulation is currently the subject of negotiations with the 
co-legislators.  
Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  establishing  the  European 
Fund  for  economic,  social  and  territorial  cohesion,  agriculture  and  rural,  fisheries  and  maritime, 
prosperity  and  security  for  the  period  2028-2034  and  amending  Regulation  (EU)  2023/955  and 
Regulation (EU, Euratom) 2024/2509 - COM(2025) 565 final. The proposed Regulation is currently the 
subject of negotiations with the co-legislators. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12 February 2021 
p.  17, 
the  Recovery 
establishing 
ELI: http://data.europa.eu/eli/reg/2021/241/oj). 

and  Resilience  Facility 

18.2.2021, 

(OJ  L 

57, 

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recommendations  and  took  stock  of  Romania’s  implementation  of  the  RRP.  On  the 
basis  of  that  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  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 staff assessment 
of  macroeconomic  vulnerabilities  for  Romania  for  the  purposes  of  that  Regulation 
were published on 20 May 2026 (6). On 3 June 2026, the Commission concluded that 
Romania  is  continuing  to  experience  excessive  macroeconomic  imbalances.  In 
particular, vulnerabilities related to fiscal and current account deficits have diminished 
somewhat  recently but  remain  very significant,  while cost  competitiveness  continues 
deteriorating  albeit  less than before. The government deficit  fell in  2025 as  result of 
marked  consolidation  efforts;  a  further  fall  of  the  deficit  is  expected  for  2026  and 
2027, but the deficit would still remain large. The bank-sovereign nexus continues to 
be  significant  as  banks’  holdings  of  domestic  government  bonds  as  a  share  of  total 
assets  are  the  largest  in  the  EU  and  increased  in  2025.  The  current  account  deficit 
improved  only  marginally  in  2025  and  is  forecast  to  remain  large  even  if  declining 
somewhat more this year. Unit labour costs slowed down markedly in 2025 after very 
strong growth in earlier years, but are expected to still grow faster than in most of the 
EU. Core inflation was the highest in the EU in recent years – with increases in VAT 
rates in 2025 only explaining part of it and is expected to remain high. Policy progress 
was significant in 2025, especially on reducing the budget deficit thanks to a two-year 
freeze of government wages and pensions, and increases in VAT rates and other taxes. 
Looking  ahead,  without  further  vigorous  fiscal  consolidation,  complemented  by 
prudent income policies and effective structural reforms, Romania remains exposed to 
rising interest rates and changes in investor confidence.  

On  8 July 2025,  the  Council  adopted  a  revised  Recommendation  under  Article  126 
TFEU  with  a  view  to  bringing  an  end  to  the  situation  of  an  excessive  deficit  in 
Romania (7). The Council recommended the following maximum growth rates of net 
expenditure: 2.8% in 2025, 2.6% in 2026, 4.6% in 2027, 4.4% in 2028, 4.2% in 2029 
and  4.0%  in  2030,  which  correspond  to  the  maximum  cumulative  growth  rates 
calculated by reference to the base year of 2024 of 2.8% in 2025, 5.5% in 2026, 10.4% 
in  2027,  15.2%  in  2028,  20.1%  in  2029  and  24.9%  in  2030.  The  corrective  net 
expenditure  path  set  out  in  that  Recommendation  supersedes  the  maximum  growth 
rates  of  net  expenditure  established  by  the  Recommendation  of  21  January  2025 
endorsing  the  medium-term  fiscal-structural  plan  of  Romania  (8)  (9).  Based  on  the 

Commission  Staff  Working  Document  ‘In-depth  review  for  Romania  Prepared  under  Regulation 
1176/2011 on the prevention and correction of macroeconomic imbalances’, SWD(2026)141 final. 
Council  Recommendation  with  a  view  to  bringing  an  end  to  the  situation  of  an  excessive  deficit  in 
Romania, adopted on 8 July 2025. All documents related to the excessive deficit procedure of Member 
State can be found at: https://economy-finance.ec.europa.eu/economic-governance-framework/stability-
and-growth-pact/corrective-arm-excessive-deficit-procedure/excessive-deficit-procedures-
overview/MemberState_en. 
Council Recommendation of 21 January 2025 endorsing the national medium-term fiscal-structural plan 
of  Romania  (OJ  C/2025/251,  10 February 2025,  Council  Recommendation  of  21  January  2025 
endorsing the national medium-term fiscal-structural plan of Romania). 
Point 2 and Annex II ("Set of reforms and investments that underpins an extension of the adjustment 
period to seven years") of the Recommendation of 21 January 2025 continue to apply. 

(7) 

(8) 

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Commission’s assessment on effective action of 3 June 2026 (10), the excessive deficit 
procedure for Romania is held in abeyance.  

(9) 

Russia’s  war  of  aggression  against  Ukraine  and  its  repercussions  constitute  an 
existential  challenge  for  the  European  Union.  The  Commission  has  invited  Member 
States  to  request  the  activation  of  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 (11). 

(10)  On  4 May 2026,  Romania  submitted  its  2026  Annual  Progress  Report  (12)  on 
adherence  to  the  recommended  maximum  growth  rates  of  net  expenditure,  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.  The  Annual  Progress  Report  also  reflects  Romania’s  biannual 
reporting  on  the  progress  made  in  implementing  its  recovery  and  resilience  plan  in 
accordance with Article 27 of Regulation (EU) 2021/241. The report on action taken 
under the excessive deficit procedure is integrated in the Annual Progress Report.  

(11)  Real  GDP  growth  in  2025  was  0.7%  and  HICP  inflation  stood  at  6.8%.  The 
Commission  Spring  2026  Forecast  projects  real  GDP  to  grow  by  0.1%  in  2026  and 
2.3% in 2027, and HICP inflation to stand at 7.0% in 2026 and 3.7% in 2027.  
(12)  Based  on  data  provided  by  Eurostat  (13),  Romania’s  general  government  deficit 
decreased from 9.3% of GDP in 2024 to 7.9% in 2025. The decrease in the deficit in 
2025  mainly  reflects  the  impact  of  several  fiscal  consolidation  packages  adopted 
between  December  2024  and  October  2025.  In  December 2024,  the  parliament 
adopted  measures  including  a  nominal  freeze  in  public  wages  and  pensions  in  2025, 
and  revenue  generating  measures  amounting  to  0.3%  of  GDP.  In  July  2025,  the 
parliament  adopted  additional  fiscal  consolidation  measures,  comprising  significant 
tax  revenue  increases  (increase  in  VAT  rates,  broadening  of  the  base  of  health 
contributions, increases in excises, and a higher dividend tax rate) and an extension of 
the  nominal  freeze  in  wages  and  pensions  into  2026.  In  September  2025,  the 
parliament  also  adopted  an  increase  in  recurrent  taxation  on  residential  property  and 
environmental  taxes.  Based  on  policy  measures  known  by  the  cut-off  date  of  the 
forecast, the Commission Spring 2026 Forecast projects a deficit of 6.2% of GDP in 
2026  and  5.8%  of  GDP  in  2027.  The  decrease  in  2026  mainly  reflects  the  full-year 
impact  of  the  measures  described  above.  The  decrease  of  the  deficit  in  2027  mainly 
reflects  the  projected  decline  in  public  investment  after  the  end  of  the  RRF  facility. 
The  fiscal  situation in Romania remains fragile.  Given the current  political  situation, 
this  assessment  remains  surrounded  by  considerable  uncertainty  and  implies 
implementation risks for the fiscal adjustment that  continues to be necessary in 2026 
and subsequent years.  

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Communication from the Commission to the European Parliament, the Council,  the European Central 
Bank,  the  European  Economic  and  Social  Committee,  the  Committee  of  Regions  and  the  European 
Investment Bank, 2026 European Semester – Spring Package, COM(2026) 200 final.  
Communication  from  the  Commission,  'Accommodating  increased  defence  expenditure  within  the 
Stability and Growth Pact’, Brussels, 19 March 2025, C(2025) 2000 final. 
The  2026  Annual  Progress  Reports  are  available  on:  https://economy-finance.ec.europa.eu/economic-
and-fiscal-governance/stability-and-growth-pact/preventive-arm/annual-progress-reports_en. 
Eurostat-Euro Indicators, 22 April 2026. 

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(13)  Based  on  the  Commission’s  estimates,  the  fiscal  stance  (14),  which  includes  both 
nationally  and  EU  financed  expenditure,  was  contractionary,  by  2.2%  of  GDP,  in 
2025.  It  is  projected  to  be  contractionary,  by  2.5%  of  GDP  in  2026  and  by  0.7%  of 
GDP in 2027. 

(14)  Based  on  data  provided  by  Eurostat  (15),  Romania’s  general  government  debt 
increased from 54.8% of GDP at the end of 2024 to 59.3% of GDP at the end of 2025. 
The increase in the debt ratio in 2026 mainly reflects high government primary deficits 
and a projected increase in interest payments. Based on policy measures known at the 
cut-off date of the forecast, the Commission Spring 2026 Forecast projects the debt-to-
GDP ratio to increase to 61.6% by the end of 2026 and to further increase to 63.4% by 
the  end  of  2027.  The  increase  in  2026  and  2027  mainly  reflects  the  high  primary 
government deficits over the period.  

(15)  Based on Eurostat data (16), total general government defence expenditure in Romania 
amounted  to  1.5%  of  GDP  in  2025.  According  to  the  Commission  Spring  2026 
Forecast, it is projected at 1.7% of GDP in 2026 and 1.8% of GDP in 2027.  

(16)  The  Union  continues  to  face  risks  of  energy  supply  disruptions  and  elevated  price 
volatility,  exacerbated  by  geopolitical  tensions  which  affect  global  oil  and  gas 
markets.  Experience  from  the  2022–2023  energy  crisis  has  shown  that  broad  and 
untargeted  measures  entail  large  fiscal  costs  and  are  socially  and  economically 
inefficient.  Since  the  outbreak  of  the  war  in  the  Middle  East  in  February 2026, 
Romania adopted fiscal policy measures to mitigate the impact of high energy prices 
on households and firms (17). These include an untargeted reduction in excise duties on 
diesel  products  until  end  June 2026  and  targeted  State  aid  to  farmers  and  some 
corporates budgeted until September 2026. According to the Commission Spring 2026 
forecast, the fiscal cost of these measures is projected to amount to less than 0.1% of 
GDP in 2026. According to Commission estimates, if these measures were to remain 
in force until end-2026, their fiscal cost would amount to 0.1% of GDP in 2026. 

(17)  Based on the Commission’s calculations, net expenditure in Romania grew by 0.5% in 
2025.  The  net  expenditure  growth  in  2025  is  below  the  recommended  maximum 
growth rate.  

(18)  Based on the Commission’s calculations,  net  expenditure in Romania is projected to 
grow by 1.8% in 2026, and 2.3% cumulatively over 2025 and 2026. The projected net 
expenditure growth in 2026 is below the recommended maximum growth rate. When 
considering  2025  and  2026  together,  the  projected  cumulative  growth  rate  of  net 
expenditure is also below the recommended maximum growth rate.  

(19)  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. Taking into account the information provided 

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16 
17 

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. 
Eurostat-Euro Indicators, 22 April 2026. 
Eurostat, government expenditure by classification of functions of government (COFOG). 
This reflects the situation at the cut-off date of the Commission’s Spring 2026 Forecast (4 May 2026). 

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by  Romania  in  its  Annual  Progress  Report,  the  Commission  finds  that  the 
implementation  of  the  key  steps  of  these  reforms  and  investments  that  were  due  by 
30 April 2026  seems  to  be  broadly  on  track.  Preparatory  work  on  the  reform  of  the 
public  sector  remuneration  system  is  ongoing  at  technical  level,  and  a  new  Law  is 
expected to be adopted in the course of the summer 2026. Some further measures need 
to  be  taken  in  the  field  of  tax  administration,  in  particular  with  a  view  to  reducing 
Romania’s  very  high  VAT  compliance  gap.  Further  work  is  also  ongoing  on  the 
property  taxation  reform,  including  the  development  of  the  IT  system  for  automated 
property assessment, the operationalisation of the specialised structure for monitoring 
public  expenditure  systems,  and  the  business  financing  reform.  The  Commission 
considers  that,  overall,  Romania  complied  with  its  commitments  in  a  satisfactory 
manner (18). 

(20)  Strengthening  budgetary  procedures  leading  to  a  better  control  of  public  investment 
would  be  highly  beneficial  to  control  the  fiscal  deficit  in  Romania.  In  recent  years 
there  has  been  a  tendency  to  overspend  compared  to  budget  plans  due  to  a  lack  of 
coordination between line ministries in charge of the investments and the Ministry of 
Finance.  An  investment  planning  document,  reflecting  all  investment  commitments 
over  the  medium-term,  including  their  life-cycle  capital  requirements  would  bring 
clarity  on  funding  requirements  and  their  availability  beyond  the  annual  budgetary 
year. Moreover, mechanisms to support funding availability beyond the annual budget 
year  and  restrictions  in  diverting  funds  to  other  purposes  are  missing.  This  overall 
situation  contributes  to  higher-than-expected  annual  fiscal  deficits.  Tax  collection 
should also be increased, particularly by closing the VAT and Corporate Income Tax 
(CIT) gaps, which currently stand at 30% and 44%, respectively, the highest values in 
the  EU.  Over  the  medium-term  and  in  line  with  fiscal  sustainability,  it  would  be 
appropriate  to  consider  a  reduction  of  the  labour  tax  wedge  for  low-income  earners, 
who currently face a comparatively high burden. 

(21)  The general and special pension reforms implemented are essential to safeguard public 
finances  and  ensure  the  equity  of  the  Romania’s  pension  system.  Further  efforts  for 
fiscal  sustainability  are  needed,  including  on  designing  and  implementing  a  public 
sector wage reform.  

(22)  The systematic, meaningful and timely 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 Union’s funding 
instruments, as well as in the context of the European Semester.  

(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)  in  Romania,  is 
above the average pace at EU level, both in terms of project selection and payments. It 
is  important  to  keep  the  current  momentum,  while  maximising  their  impact  on  the 
ground.  Romania  is  already  taking  action  under  its  cohesion  policy  programmes  to 
boost  competitiveness  and  growth.  Nevertheless,  some  areas  may  require  further 
strengthening  in  implementation,  including  in  mitigating  the  social  and  economic 
impacts  of  the  decarbonisation  and  just  transition  of  the  economy,  with  particular 

18 

Communication from the Commission to the European Parliament, the Council, the European Central 
Bank,  the  European  Economic  and  Social  Committee,  the  Committee  of  Regions  and  the  European 
Investment Bank, 2026 European Semester – Spring Package, COM(2026) 200 final. 

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attention to the territories most affected by this transition. Romania needs to accelerate 
implementation of the JTF as resources are due for disbursement by the end of 2026. It 
is essential to ensure that the new investments identified by Romania in its mid-term 
review  of  the  cohesion  policy  funds,  notably  those  linked  to  the  five  priorities 
identified  in  the  Mid-Term  Review  Regulation  (19),  are  deployed  rapidly  and 
effectively. 

(24)  Romania faces several challenges related to the quality and effectiveness of its public 
administration, the preparation and prioritisation of large projects, the decarbonisation 
of  the  economy  and  energy  production,  social  protection  and  access  to  essential 
services,  labour  market  participation  and  skills  shortages,  poverty  and  social 
exclusion. 

(25)  Weak  public  administration  and  institutions  continue  to  weigh  on  the  business 
environment. Although a formal framework to develop quality legislation is in place, 
its  implementation  lacks  consistency.  Shortcomings  persist  for  public  consultations 
and  impact  assessments,  which  remain  often  formalistic.  Civil  society  organisations 
and businesses still raise concerns about public consultations with very tight deadlines 
and little consideration for their comments. Public consultations would benefit from an 
earlier engagement of stakeholders in the policy cycle, while the quality of legislation 
could  be improved  by strengthening the capacity of civil  servants  to draft  regulatory 
impact assessments and ex post evaluations. The predictability of decision-making and 
legal  certainty  remains  a  major  challenge  due  to  the  frequent  use  of  government 
emergency  ordinances  in  the  legislative  process.  Moreover,  Romania  is  among  the 
weaker  performers  on  regulatory  burden  and  66%  of  companies  view  business 
regulation  as  an  obstacle  to  long-term  investment.  Despite  improvements,  the 
availability of digital public services for businesses and individuals is well below EU 
averages  (55% vs EU:  86%;  63% vs EU:  82%). Further efforts are needed  to  ensure 
interoperability  across  all  levels  of  government,  set  clearer  service  standards  and 
improve transparency and user experience for digital public services. Romania would 
benefit  from  a  stronger  implementation  of  the  corporate  governance  framework  for 
state-owned enterprises, including on adequate transparency and competition in board 
appointments, consistent mandates, and the use of performance-based remuneration.  

(26)  Despite  efforts  made  in  2025,  recurring  delays  in  the  implementation  of  EU 
programmes,  including  the  RRF,  point  to  persistent  weaknesses  in  the  public 
administration’s  capacity  to  plan,  organise,  and  implement  complex  projects. 
Competition  in  public  procurement  is  limited,  shortcomings  in  planning  and  tender 
preparation  are  persistent  and  public  procurement  remains  a  high-risk  area  for 
corruption  and  fraud.  Implementation  of  climate  adaptation  policies  and  investments 
in  environmental  infrastructure,  particularly  in  water  management  and  resilience, 
waste management and circular economy, nature-based solutions, are hindered by lack 
of  expertise  and  resources,  at  all  territorial  governance  levels,  as  well  as  systemic 
in  governance  and  administrative  procedures,  strategic  planning, 
weaknesses 
enforcement  and  data  collection.  At  the  same  time,  pressures  on  ecosystems  and 
biodiversity persist, including marine ecosystems. Large gaps persist in rail and road 
infrastructure  (including  their  climate  resilience),  rolling  stock  modernisation, 
connectivity  in  remote  areas  and  cross-border  connectivity  with  uneven  TEN-T 

19 

Regulation  (EU)  2025/1914  of  the  European  Parliament  and  of  the  Council  of  18 September 2025 
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. 

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implementation,  while  vehicle  fleet  renewal  remains  slow  and  road  safety  outcomes 
remain  among  the  weakest  in  the  EU.  Addressing  these  investment  needs  would 
support  economic  growth  as  well  as  regional  convergence  as  GDP  per  capita  in  the 
capital  region  is  substantially  higher  than  in  any  other  region  of  the  country.  While 
some measures have been taken to foster private investments, expanding firms’ access 
to  bank  and  non-bank  finance,  especially  for  SMEs,  could  be  facilitated,  as  the 
participation by retail and institutional investors in the capital markets is still low and 
financial  literacy  is  weak.  Both  public  and  business  expenditure  in  research  and 
innovation  are among  the lowest  in  the EU, while  researchers’ careers and  business-
academia  cooperation  (and  ensuing  technology  transfers)  need  strengthening.  To 
address 
these  complex  challenges,  Romania  would  benefit  from  reinforcing 
administrative capacity at all levels of government. 

(27)  While Romania has made some progress in decarbonising its energy mix - particularly 
by decommissioning coal- and lignite-fired capacity under the RRP - additional efforts 
are  required  to  sustain  the  energy  transition.  The  country’s  energy  system  still  relies 
heavily on fossil fuels, which often set the high electricity price in the market. Phasing 
out coal and limiting natural gas use by replacing them with cleaner alternatives would 
better shield Romania’s economy from future fossil-fuel price shocks, increase energy 
supply security, and ultimately benefit competitiveness through lower energy prices. 

(28)  Some progress was made in expanding renewable energy production in  recent years, 
and  the  RRP  contains  measures  aimed  at  reforming  the  regulatory  framework  to 
favour  the  deployment  of  renewable  energy  sources.  However,  the  challenges 
identified  in  2025  remain.  Romania  faces  multiple  barriers  to  the  roll-out  of 
renewables,  particularly  an  unpredictable  regulatory  environment,  price  uncertainty, 
cumbersome permitting and unclear land-use rules. Additional investments to improve 
the system flexibility are needed, especially focusing on the grid infrastructure, and on 
regulatory  reforms  to  simplify  and  speed  up  permitting  procedures,  to  facilitate  the 
uptake  of  additional  renewable  energy.  Romania  is  on  track  to  achieving  the  15% 
cross-border  interconnection  target  for  2030,  but  its  capacity  is  still  insufficient,  and 
progress is slow. There is scope for further coordination with neighbouring countries 
(Bulgaria,  Hungary,  Moldova,  Ukraine)  to  further  enhance  market  integration  in  the 
region.  

(29)  Romania still subsidises fossil fuels, while the heating sector, which is heavily reliant 
on gas, remains largely unreformed. However, the current absence of a clear phase-out 
trajectory  for  these  subsidies  before  2030  disincentivizes  electrification  and  hinders 
the decarbonisation of the energy mix. It is particularly important to phase out fossil 
fuel  subsidies  that  do  not  address  energy  poverty  in  a  targeted  way,  and/or  do  not 
respond to genuine energy security concerns. Due to an unfavourable electricity-to-gas 
price ratio (to which fossil-fuel subsidies partially contribute), the share of electricity 
in energy consumption has remained largely stagnant in the last decade. High energy 
prices  affect  energy-intensive industries and competitiveness. The industrial  sector is 
dominated by processes with limited flexibility (e.g.  steel/aluminium, cement, glass), 
which  constrains  demand-side  response.  Moreover,  Romania’s  RRP  and  cohesion 
policy programmes contain several large investments on energy efficiency in housing 
and  public  buildings,  but  progress  has  been  slow  and  housing  quality  issues  remain. 
Further  policy  efforts  are  needed  to  accelerate  the  deployment  of  new  renewable 
generation capacity, reduce reliance on fossil fuels to enable the decarbonisation of the 
heavy  industry,  and  reduce  energy  consumption,  in  particular  in  the  transport  sector 
and the building stock. 

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(30) 

In light of the crucial role of human capital in enhancing the Union’s competitiveness 
and  strategic  autonomy,  in  2026  the  Council  recommended  that  Member  States  take 
action  to  urgently  address  human  capital-related  structural  challenges  in  the  areas  of 
skills  and  education,  which  hamper  competitiveness.  The  2026  country-specific 
recommendations  addressed  to  Romania  can  contribute  to  the  implementation  of  the 
Council Recommendation on human capital in the Union.   

(31)  Women’s  participation  in the labour  force is  among  the lowest  in  the EU (57.8% vs 
EU:  71.1%).  Young  people  struggle  to  enter  formal  employment,  as  youth 
unemployment was among the highest in the EU, and the rate of young people neither 
in employment nor in education and training (NEETs) is significantly higher than the 
EU  average  (19.4%  vs  EU:11.1%).  In  addition,  employment  remains  limited  for 
persons with disabilities since the disability employment gap is significantly above the 
EU average and their labour market participation at the end of their careers is one of 
the lowest in the EU. Increasing the participation of women, young people and persons 
with  disabilities  in  the  labour  market  could  mitigate  adverse  demographic  effects  by 
increasing the available workforce and supporting economic development. Addressing 
challenges  related  to  the  effectiveness  of  activation  measures,  limited  enrolment  of 
children under three years of age in early childhood education and care (11.4% vs EU: 
39.2%), particularly in rural areas, and accessibility and adaptation of workplaces for 
persons  with  disabilities  to  support  their  inclusion  in  the  labour  market  would  be 
important. In addition, Romania is one of the worst performers in the EU in terms of 
in-work  poverty  (10.7%  of  employed  people  vs  8.3%  in  the  EU  in  2025)  -  mostly 
driven by self-employed - despite steadily decreasing since 2016, when it was 18.6%. 
Concurrently, the average real  wage has been growing substantially during the same 
period.  Romania  could  consider  improving  targeting  and  funding  of  labour  market 
activation  measures  and  shifting  the  focus  from  employment  subsidies  to  training, 
outreach and digitalisation of services. 

(32)  Romania  has  introduced  major  education  and  skills  reforms  to  support  skills 
development. Despite these efforts, challenges persist in reducing early school leaving, 
enhancing  basic  skills  and  basic  digital  skills,  increasing  the  effectiveness  of 
vocational  education  and  training,  and  in  aligning  educational  outcomes  with  labour 
market needs. The share of young adults who left education and training early remains 
significantly high against a steady decline at EU level, and even higher in rural areas 
(23.7% vs 4.6% in cities), in towns and suburbs, and among Roma and persons with 
disabilities.  Low  basic  skills  among  young  Romanians  hinder  competitiveness  and 
human  capital  development,  as  over  40%  of  15-year-olds  do  not  reach  minimum 
proficiency  in  mathematics,  reading,  and  science  (vs  EU  average  below  30%), 
revealing systemic issues in teaching quality, with rural students scoring substantially 
lower  than  urban  students. Moreover,  in  rural  areas,  only  66.5%  of  adults  have 
completed  primary  education  (vs  94.7%  in  cities)  and  6.6%  have  attained  tertiary 
education  (vs  37.3%  in  cities).  In  addition,  low  participation  of  adults  in  learning  is 
limiting skills development and career progression. Addressing these challenges would 
also contribute to improving job quality. The major deficit of basic digital skills poses 
risks for economic development and social inclusion. Only 7.2% of recent vocational 
education  and  training  (VET)  participants  had  work-based  learning  during  their 
training  (vs  EU  average:  65.2%).  In  addition,  the  misalignment  between  workforce 
skills  and  employer  needs,  including  a  persistent  lack  of  STEM  graduates,  leads  to 
skills shortages, particularly in sectors relevant to the green transition, and represents a 
key  constraint  for  businesses.  To  address  these  challenges,  Romania  would  benefit 

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from closing structural education gaps and safeguarding life-long learning and making 
best use of available data on skills needs and development. 

(33)  Social conditions continue to improve, but Romania still has one of the highest risks of 
poverty  or  social  exclusion  in  the  EU,  with  child  poverty  and  social  exclusion 
especially high (32.8% vs EU:24.2%). Vulnerable groups, such as Roma, persons with 
disabilities,  low-educated  populations,  and  people  living  in  rural  areas  face  elevated 
risks.  The  impact  of  social  transfers  (excluding  pensions)  on  poverty  reduction  was 
limited (18.8% vs EU: 34.4%), and the expenditure on social protection also remains 
among  the  lowest  in  the  EU.  Social,  health  and  educational  services  continue  to  be 
unevenly  available,  with  rural  areas  and  marginalised  communities  such  as  Roma 
having  difficulties  in  accessing  them.  Without  a  better  coordination  between  central 
and local levels, including on data collection and exchange, evidence to assess social 
housing  needs  and  the  appropriateness  of  the  social  housing  stock  remains  limited. 
Preventable and treatable mortality remained very high, while weak primary care, also 
due to lack of staff, further drives avoidable hospital use that is not cost effective and 
limits  opportunities  for  early  intervention.  Availability  of  long-term  care  and  social 
services  remains 
insufficient,  particularly  for  home  care  and  non-residential 
community-based  services  for  independent  living  for  persons  with  disabilities, 
delaying  the  deinstitutionalisation  process.  Addressing  these  challenges  would  also 
contribute  to  supporting  upward  social  convergence,  in  line  with  the  Commission 
services’  second-stage  country  analysis  of  the  Social  Convergence  Framework  (20). 
Romania  would  benefit  from  improving  the  coverage  and  adequacy  of  the  social 
protection  system,  also  for  self-employed,  including  farmers,  stronger  coordination 
across government  levels and  additional investments  in  accessible services to  reduce 
poverty and foster social inclusion. 

(34) 

In  light  of  the  Commission’s  in-depth  review  and  conclusions  on  the  existence  of 
excessive  imbalances,  recommendations  under  Article  6  of  Regulation  (EU)  No 
1176/2011  are  reflected  in  recommendations  (1),  (2)  and  (3).  Policies  referred  to  in 
recommendation (1) help to address vulnerabilities linked to large fiscal and external 
deficits.  Policies  referred  to  in  recommendations  (2,  and  3)  help  to  address 
vulnerabilities linked to competitiveness.  

HEREBY RECOMMENDS that Romania take action in 2026 and 2027 to:  

1. 

Continue adhering to the maximum growth rates of net expenditure recommended by 
the  Council  on  8 July 2025,  with  a  view  to  bringing  an  end  to  the  situation  of  an 
excessive deficit. Reinforce defence spending and readiness while ensuring spending 
efficiency  and  gradually  adapting  the  budget  to  sustain  structurally  higher  defence 
spending. Ensure that any measures taken to mitigate the impact of the hike in energy 
prices  are  temporary,  targeted  at  protecting  vulnerable  households  or  at  addressing 
the  needs  of  energy-intensive  firms,  preserve  incentives  for  energy  savings  while 
ensuring  that  their  fiscal  cost  is  compatible  with  the  commitments  under  the  EU 
fiscal  framework.  Take  further  decisive  actions  to  safeguard  the  sustainability  of 
public  finances,  including  by  fully  implementing  the  general  and  special  pension 
reforms, designing and implementing a reform of public sector wages conducive to 
fiscal  consolidation  and  greater  fairness  and  strengthening  budgetary  procedures  to 

20 

SWD(2026)122  –  Second-stage  country  analysis  on  social  convergence  in  line  with  the  Social 
Convergence Framework (SCF), 2026. 

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2. 

3. 

4. 

5. 

6. 

ensure better control over public investments. Increase the overall tax collection as a 
share of GDP, by focusing on closing the VAT and CIT gaps. 

Ensure continuity of reforms and investments implemented under the Recovery and 
Resilience  Facility.  Sustain  implementation  momentum  under  cohesion  policy 
programmes  building,  where  appropriate,  on  the  reallocation  to  strategic  priorities 
and flexibilities in the mid-term review of the cohesion policy framework.  

investment.  Improve 

Foster  competitiveness  and  reduce  territorial  disparities  by  promoting  private 
investment,  including  in  research  and  innovation,  and  ensuring  reliable  long-term 
public  R&D 
the  quality  and  effectiveness  of  public 
administration  at  and  across  all  levels  of  government,  the  digitalisation  of  public 
services  and  the  predictability  and  quality  of  decision-making,  through  appropriate 
streamlined 
consultations, 
stakeholder 
administrative  procedures.  Strengthen 
the  corporate 
governance  framework  for  state-owned  enterprises,  while  promoting  the  economic 
efficiency  and  rationalisation  of  the  sector.  Ensure  mature  public  investments  are 
carried  out  in  a  timely  manner,  including  through  effective  public  procurement 
procedures. Facilitate investments in environmental infrastructure and in sustainable 
and  safe  transport,  including  to  increase  the  connectivity  of  remote  and  rural  areas 
and climate resilience.  

assessments 
implementation  of 

impact 
the 

effective 

and 

Further decarbonise the energy sector by boosting the flexibility and grid capacity of 
the electricity system, accelerating the roll-out of renewable energy sources, as well 
as increasing cross-border interconnections and electricity trading. Increase the share 
of  renewable  and  upgrade  district  heating  generation  and  related  infrastructure  to 
meet  high-efficiency  standards,  coupled  with  energy  efficiency  renovations  of 
buildings and the phase out of fossil fuel subsidies in the heating sector. 

labour  market  participation  of  underrepresented  groups 

through 
Strengthen 
improving effectiveness of active labour market policies, accessibility of workplaces 
and  participation  in  early  childhood  education  and  care.  Tackle  skills  shortages  by 
reducing early school leaving, boosting basic skills and labour market relevant skills, 
including through continuous adult learning, enhancing the effectiveness of VET, as 
well  as  making  best  use  of  skills  intelligence  in  education  and  skills  policies,  in 
particular in rural areas. 

Reduce  poverty  and  social  exclusion  risks  by  extending  social  protection  and 
improving  its  effectiveness,  including  through  better  access  to  quality  services, 
focusing  on  primary  and  preventive  healthcare,  long-term  care,  social,  educational 
and employment services, in particular for disadvantaged groups, while maintaining 
fiscal sustainability. 

Done at Brussels, 

For the Council 
The President 

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