The European Commission has accepted a postponement: Romania must come up with a plan to reduce the deficit by January

The European Commission has agreed with Romania on extending the deadline until January 31, 2025 for the country to submit its budget deficit reduction plan.

„Given that we have not yet received Romania’s plan, we cannot comment on its content. Before submitting the plan, the Commission is engaged in a technical dialogue with member states, including Romania, to ensure that these plans meet all the requirements set out in the legislation,” explained a European Commission spokesperson to Reuters on Wednesday.

Romania has not yet presented the 2025 budget draft, but analysts and rating agencies expect some tax increases to strengthen public finances. The government coalition has increased the minimum wage and public pensions this year, Reuters reports.

Prior to this, Prime Minister Marcel Ciolacu stated that the Government „has reached an agreement” with the European Commission regarding the fiscal plan to reduce the deficit and emphasized that it is essential that EC experts have agreed that Romania needs the requested 7-year period to carry out major investment projects in the economy.

„Only in this way will we reach the EU average in terms of development, citizens’ income, and overall living standards. There is also agreement on the idea that if the deficit is lower than investments, then we are on a healthy trajectory,” said Prime Minister Marcel Ciolacu at the beginning of Wednesday’s government meeting.

In turn, the government spokesperson, Mihai Constantin, announced that the agenda of discussions at the National Tripartite Council for Social Dialogue on Wednesday will include the status of negotiations with the European Commission regarding Romania’s fiscal plan.

Authorities in Bucharest have raised the deficit target for this year to 6.9% of GDP, and the Fiscal Council estimates that, most likely, Romania will end 2024 with a cash budget deficit of 8%.

Romania has been under an excessive deficit procedure since 2020, requiring it to present a multi-year plan to the European Commission to reduce the deficit below the 3% of GDP threshold. Romania’s tax revenues account for less than 30% of GDP, compared to the EU average of 41%.