Romania's Budgetary-Structural Plan was approved by the EU's Economic and Financial Affairs Council (ECOFIN) on January 21, alongside similar plans for 20 other EU member states, Minister of Investments and European Projects Marcel Bolos announced on Facebook. 

The approval allows Romania to carry out €90bn worth of investments over the next three years, targeting infrastructure, healthcare, education and the green transition. It shields Romania from drastic fiscal measures that could hinder economic growth, Bolos said.

A credible fiscal consolidation plan should also reassure investors about Romania’s economic outlook, tame surging bond yields and prevent negative actions of rating agencies. Amid political turmoil in December, Fitch already cut the outlook on the country's fragile BBB- sovereign rating, placing its debt closer to junk. 

Romania's budget deficit hit 8.6% of GDP in 2024, nearly three times the 3% upper limit. This was the fourth year since the country entered the Excessive Deficit Procedure (EDP). The ruling coalition that drafted the fiscal consolidation plan remained in office after the December 1 elections and confirmed plans to cut the gap to 7% of GDP in 2025. 

ECOFIN recommends that Romania should put an end to the excessive deficit situation by 2030. Romania should ensure that the nominal growth rate of net expenditure does not exceed 5.1% in 2025, 4.9% in 2026, 4.7% in 2027, 4.3% in 2028, 4.2% in 2029 and 3.9% in 2030.

The European Commission expects Romania to draft and enact specific tax reforms by April 1.

The Commission gave its green light to Romania’s fiscal consolidation plan last November in the European Semester report, stressing that Romania should draft and enact the specific tax reforms aimed at supporting the fiscal consolidation by April 1, 2025.

Romania now has to prepare a report, building on the World Bank report on taxation prepared under the National Recovery and Resilience Plan (PNRR), milestone 205, establishing two scenarios for the tax reform, with fully specified measures by April 1, according to the set of reforms and investments that underpins an extension of the adjustment period to seven years for Romania, endorsed by the European Commission on November 26. Measures should cover all areas of taxation and social contributions.

Implementation and entry into force of the measures should be completed by April 1, at the latest, according to the recommendations published by the European Commission.

Bolos commented on ECOFIN's approval on a highly positive note.

“This decision guarantees our country’s continued development, protecting essential investments and ensuring long-term financial stability,” said Bolos. Without this plan, he highlighted that Romania would have been compelled to implement steep budgetary adjustments, including massive spending cuts and tax hikes, within four years — a move that could have derailed its development trajectory.

Romania joins several countries, including France, Spain, Italy and Finland, in extending the fiscal adjustment period to seven years, delaying the target for budgetary compliance to 2031.

Romania’s 2025 budget is expected to be announced by the end of January. Meanwhile, the fiscal consolidation package endorsed at the end of 2024 does not entirely secure the desired consolidation this year.

"The fiscal budget plan aims to stabilise Romania's public debt in a context in which Romania continues to be among the top in the EU in terms of public investment levels - over 7% of GDP, reducing the budget deficit to below 3% during the 2025-2031 period and creating the premises for the sustainability of public finances," said Minister of Finance Tanczos Barna, who attended the meeting.