The EC has warned Romania that delaying reforms puts recovery funds at risk – 2024-03-21 13:17:13

The European Commission warned Romania today that it was behind on reforms it must implement in exchange for EU recovery funds and that its budget deficit in a year facing a series of elections was worrying, so billions of euros earmarked for Bucharest, are at risk, reported Reuters.

The EU member state, which has been trying to rein in its budget deficit since before the COVID-19 pandemic, will hold local, presidential, parliamentary and European elections this year.

So far, it has received around €9 billion of the total package of €28.5 billion in grants and loans available until 2026 from the EU’s Recovery and Resilience Plan (RRF).

The payments are tied to a series of reforms, including fiscal changes, and Romania’s progress has stalled. The Black Sea country sent a third payment request in December and Commission representatives are in Bucharest this week to discuss missed targets and deadlines.

“The third payment … is delayed compared to what it should have been,” Celine Gower, head of the EC’s RRF task force, told a press conference.

“We see many investments that have not actually started. My message is of an urgent nature,” she noted.

Declan Costello, deputy head of the Commission’s Directorate for Economic and Financial Affairs, said Brussels was very concerned about Romania’s financial situation.

“The deficit should have been corrected by this year,” Costello noted at the same conference. “We see the trends going in the wrong direction. Right now I expect the deficit to be close to, if not above, 7 percent of GDP.”

Romania initially committed to bringing its budget deficit below the EU ceiling of 3 percent of GDP by 2024. However, the country currently expects to achieve this goal only in 2027 if it does not change its tax system. Romania, which is subject to the EU’s excessive deficit procedure from 2020, aims for a deficit of 5 percent of GDP this year. Its tax revenues amount to 27.5 percent of GDP compared to the EU average of 41 percent, the agency notes.