The European Commission gives Romania a blank slate and a long list of arrears. Reforms that cannot be postponed

The European Commission published the country recommendations for 2026-2027 on Wednesday. Romania remains with excessive macroeconomic imbalances, but has been praised for fiscal consolidation efforts since 2025, according to the document.

The document outlines the list of priorities that the Bucharest authorities should address in the next two years. The overall conclusion: real progress in reducing the deficit, but significant vulnerabilities remain.

The deficit is decreasing, but too slowly

The budget deficit fell from 9.3% of GDP in 2024 to 7.9% in 2025 – a reduction achieved by freezing public wages and pensions, VAT increases, higher excise duties and a higher dividend tax. The Commission estimates that the deficit will continue to decline, to 6.2% in 2026 and 5.8% in 2027, but notes that the fiscal situation remains fragile, with additional risks generated by domestic political uncertainty.

Public debt rose from 54.8% of GDP at the end of 2024 to 59.3% at the end of 2025, with an upward trajectory projected to 63.4% in 2027. The excessive deficit procedure remains in place but is kept on stand-by following adjustment efforts.

Real economic growth was 0.7% in 2025. The Commission forecasts an advance of just 0.1% in 2026 – near stagnation – followed by a return to 2.3% in 2027. Inflation calculated by the harmonized index of consumer prices remains high: 6.8% in 2025, with a forecast of 7.0% in 2026.

Tax collection, the weakest in the EU

One of the most critical points of the report concerns tax collection capacity. Romania's VAT gap amounts to 30% of potential receipts, the largest in the European Union. The Commission explicitly recommends reducing this gap as an urgent priority. In the medium term, the document also suggests a reduction in labor taxes for low-income workers, who currently bear a relatively high tax burden compared to the European average.

Pensions, public wages and investments – reforms that cannot be delayed

The Commission welcomes the adoption of the general and special pension reform, but calls for its full and sustained implementation. Moreover, it considers it urgent to design and implement a public sector payroll reform — an area where, the document notes, there is a chronic tendency to spend more than budgeted, due to poor coordination between line ministries and the Ministry of Finance.

The lack of a medium-term investment plan, reflecting all commitments and funding requirements over the life cycle of the projects, is identified as another structural vulnerability.

Energy: Transition Blocked by Fossil Fuel Subsidies

Romania continues to subsidize fossil fuels, and the district heating sector remains largely unreformed, dependent on natural gas. The Commission warns that the absence of a clear timetable for removing these subsidies before 2030 discourages electrification and slows down decarbonisation.

The report finds that electricity's share of total energy use has stagnated over the past decade, in part because of an unfavorable ratio between the price of electricity and gas – to which fossil fuel subsidies contribute. Among the concrete recommendations: accelerating the installation of renewable energy capacities, modernizing the electricity network, increasing cross-border interconnections and renovating the built stock.

The labor market: women, young people and people with disabilities, outside the system

Romania has one of the lowest female labor market participation rates in the EU – 57.8%, compared to the European average of 71.1%. The rate of young people neither in employment nor in education or training (NEETs) is 19.4%, almost double the EU average of 11.1%. Youth unemployment is among the highest in the bloc.

The employment gap for people with disabilities is significantly above the European average and their participation in the labor market at the end of their career is one of the lowest in the EU. The commission recommends improving active employment policies, expanding access to care services for children under three years old – Romania registers a participation rate of 11.4%, compared to 39.2% in the EU – and adapting workplaces for people with disabilities.

Education: More than 40% of students do not reach minimum proficiency in math and reading

The Romanian educational system remains one of the most fragile in the Union. More than 40% of 15-year-olds do not reach the minimum proficiency level in maths, reading and science — compared to the European average of under 30%.

Early school leaving reaches 23.7% in rural areas, compared to 4.6% in cities. Only 7.2% of VET participants benefited from work-based learning, compared to a European average of 65.2%.

Poverty and social exclusion – still among the highest rates in the EU

Almost a third of children in Romania (32.8%) are at risk of poverty or social exclusion, compared to 24.2% in the EU. The impact of social transfers — excluding pensions — on poverty reduction is 18.8%, compared to 34.4% in the EU. Avoidable mortality remains very high, access to primary health care is limited in rural areas, and long-term care services are insufficient.

The 6 concrete recommendations

fiscality – compliance with the expenditure ceiling, reform of public sector pensions and salaries, reduction of the VAT gap (30%)

European funds – the continuation of the PNRR reforms and the acceleration of the absorption of cohesion funds, including the Just Transition Fund, with a settlement deadline at the end of 2026.

Competitiveness and administration – private investments in research and innovation, digitization of public services, governance of state enterprises, transport infrastructure and rural connectivity.

Energy and decarbonisation – expansion of the electricity grid, more energy from renewable sources, cross-border interconnections, elimination of fossil fuel subsidies

Labor market and education – increasing female employment (57.8% compared to the EU average of 71.1%), reducing NEETs (19.4% compared to 11.1% in the EU), combating early school leaving and the shortage of digital and STEM skills.

Poverty and social protection – expanding the social protection system, improving access to primary medical services and long-term care, with an emphasis on vulnerable groups and rural areas.

The Commission adopted on Wednesday the spring package of the European Semester 2026. In an environment marked by geopolitical uncertainty, the package establishes policy guidelines for member states, with a particular focus on strengthening the EU's competitiveness, strategic autonomy, as well as resilience and economic and social cohesion, while maintaining the sustainability of public finances, the document says.

Escalating global tensions, heightened security risks and climate-related challenges, as well as volatile energy prices and persistent cost-of-living pressures continue to weigh on Europe's economy, affecting both households and businesses.

“As regards Austria, Belgium, Finland, France, Hungary, Italy, Poland, Romania and Slovakia, the Commission considered that effective measures have been taken to correct the excessive deficit. It is therefore not necessary to take further measures under the EDP at this stage,” the document states.

Country report and recommendations of the Commission can be consulted here.