Romania has not sent the European Commission (EC) the Annual Progress Report on reducing the budget deficit, which it was supposed to send by April 30 as part of the implementation of the 7-year fiscal plan agreed in October 2024, the EC confirmed for Profit.ro. 

In principle, particularly since the fiscal reform is a [overdue] target under the Resilience Facility (RRF), this might result in the suspension of the disbursement of cohesion and RRF funds. 

However, president-elect Nicuşor Dan, quoted by Economedia.ro, argued that the European Commission would understand the situation in the sense that "no one expects" the new government to adopt in three weeks the measures delayed for three to four years. 

President Dan's expectations imply that the "new authorities" are fundamentally different from the "past authorities" – while the only change can so far be seen at the level of the Presidency while the new government expected to be formed in the coming weeks will largely include the parties in the past executive that have ruled over the past "three to four years." 

Indeed, the European Commission may consider the political turmoil Romania has experienced over the past several months and the caretaker nature of the executive since April, but the new government has to come out with at least a rough plan to address the fiscal issues. 

To address the urgency of the matter, president Dan promised last week to come up" within a week," after consultations with the Finance Ministry, with the first draft for the fiscal reform. At the same time, he started consultations with the political parties to form the new executive.

The tax reform, according to the provisions of the fiscal plan, was supposed to be discussed and approved by the end of March to be in force and to produce revenues from April. For the 9 months of 2025 (April-December), the tax reform should have brought revenues equivalent to about 1.3% of GDP, around RON 25 billion(EUR 5 billion). For a full year, such as 2026, the impact should have been 1.7% of GDP.

iulian@romania-insider.com

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