On 3 July 2026, the Council of the European Union adopted a recommendation outlining the economic, social, employment, structural and budgetary policies Romania must implement to correct its excessive deficit and address macroeconomic imbalances. The recommendation sets maximum net expenditure growth rates for Romania: 2.6% in 2026, 4.6% in 2027, 4.4% in 2028, 4.2% in 2029 and 4.0% in 2030, with cumulative growth from a 2024 base reaching 24.9% by 2030.
The recommendation follows the Commission's assessment on 3 June 2026, which held the excessive deficit procedure in abeyance. Romania submitted its 2026 Annual Progress Report on 4 May 2026. The Council notes that real GDP growth was 0.7% in 2025, projected at 0.1% in 2026 and 2.3% in 2027, while HICP inflation stood at 6.8% in 2025, projected at 7.0% in 2026 and 3.7% in 2027. The general government deficit fell from 9.3% of GDP in 2024 to 7.9% in 2025, projected at 6.2% in 2026 and 5.8% in 2027. Government debt rose from 54.8% of GDP at end-2024 to 59.3% at end-2025, projected at 61.6% by end-2026 and 63.4% by end-2027. Defence expenditure was 1.5% of GDP in 2025, projected at 1.7% in 2026 and 1.8% in 2027. Net expenditure grew by 0.5% in 2025 (below the recommended maximum) and is projected to grow by 1.8% in 2026 (also below the recommended maximum).
The Council recommends that Romania strengthen budgetary procedures, improve tax collection—noting the VAT gap at 30% and the corporate income tax gap at 44%, the highest in the EU—and consider reducing the labour tax wedge for low-income earners. Romania must also accelerate implementation of the Just Transition Fund, with resources due for disbursement by end of 2026. The recommendation shall not apply to any exclusion specified in the text.
Policy orientations and trade-offs The recommendation balances fiscal consolidation with growth-supportive reforms. Adhering to the net expenditure path will reduce the deficit but may constrain public investment and social spending in the short term. Improving tax collection could increase revenues without raising rates, but administrative reforms may face resistance. Reducing the labour tax wedge could boost employment but reduce social security contributions. Accelerating Just Transition Fund spending supports coal regions but requires absorption capacity.
Impact on stakeholders - Romanian government: Must implement corrective fiscal measures and structural reforms, facing political challenges in cutting spending or raising revenues. - Romanian taxpayers: May benefit from reduced labour tax wedge for low-income earners, but could face higher taxes or reduced public services if consolidation relies on spending cuts. - EU institutions: The Commission will monitor compliance; the Council's recommendation provides a framework for fiscal discipline. - Investors: Clear fiscal targets may improve confidence and reduce borrowing costs, but slow growth could dampen investment.
Institutional follow-up Romania must report on progress in its next annual progress report. The Commission will assess compliance and may recommend further steps. The Council may review the recommendation if economic conditions change significantly.