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budget for 2025, which has yet to be designed. General government debt was 48,9 % of GDP at end-2023. According to the Commission forecast, the debt ratio is expected to increase to 52,2 % of GDP at end-2024. It is projected to increase to 56,1 % of GDP at end-2025 and 59,7 % at end-2026. The fiscal forecast by the Commission does not consider the policy commitments in the medium-term plans as such until they are underpinned by credibly announced and sufficiently specified concrete policy measures. Net expenditure path and main macroeconomic assumptions in the plan (16) Romania's national medium-term fiscal-structural plan covers the period 2025–2028 and presents a fiscal adjustment over seven years. (17) The plan contains all information required by Article 13 of Regulation (EU) 2024/1263. (18) The plan commits to the net expenditure path indicated in Table 2, corresponding to average net expenditure growth of 4,8 % over the years 2025–2028. In addition, Romania commits to a set of reforms and investments with the view to extending the adjustment period to 7 years (2025–2031), over which the average net expenditure growth is planned to be 4,4 %. The average net expenditure growth reported in the plan over the adjustment period (2025– 2031) is lower than the average net expenditure growth in the reference trajectory transmitted by the Commission on 21 June 2024 (5,2 %). The plan assumes potential real GDP growth to decrease gradually from 2,7 % in 2024 to 2,0 % in 2031. In addition, the plan expects the growth rate of the GDP deflator to decrease from 7,2 % in 2024 to 5,0 % in 2025 and to gradually slow further to 4,4 % in 2031. Table 2: Net expenditure path and main assumptions in Romania's plan Extension of the adjustment period Average over the Average over 2024 2025 2026 2027 2028 2029 2030 2031 period of validity of the adjustment period the plan 2025–2028 2025–2031 Net expenditure 14,3 5,1 4,9 4,7 4,3 4,2 3,9 3,8 4,8 4,4 growth (annual, %) Net expenditure 14,3 20,2 26,0 31,9 37,6 43,3 49,0 54,7 n.a. n.a. growth (cumulative, from base year 2023, %) Potential GDP 2,7 2,7 2,5 2,4 2,2 2,1 2,0 2,0 2,4 2,3 growth (%) Inflation (GDP de­ 7,2 5,0 4,9 4,8 4,7 4,6 4,5 4,4 4,8 4,7 flator growth) (%) Source: Medium-term fiscal-structural plan of Romania and Commission calculations. 4/21 ELI: http://data.europa.eu/eli/C/2025/647/oj OJ C, 10.2.2025 EN Implications of the plan's net expenditure commitments for general government debt (19) If the net expenditure path committed to in the plan and the underlying assumptions materialise, general government debt would, according to the plan, increase from 52,2 % of GDP in 2024 to 62,6 % of GDP in 2029, before declining to 61,4 % of GDP in 2031, as per the following table. It is then projected to continuously decline to levels well below 60 % of GDP during the 10 years following the end of the period covered by the plan. Table 3: General government debt and balance developments in Romania's plan 2023 2024 2025 2026 2027 2028 2029 2030 2031 2041 Government debt 48,9 52,2 55,7 58,5 60,6 62,0 62,6 62,4 61,4 47,9 (% of GDP) Government balance - 6,5 - 7,9 - 7,0 - 6,4 - 5,7 - 5,0 - 4,2 - 3,4 - 2,5 - 1,6 (% of GDP) Source: Medium-term fiscal-structural plan of Romania. Thus, according to the plan, the general government debt ratio would be brought below the Treaty reference value of 60 % of GDP over the medium term. This is plausible, as, based on the plan's assumptions, debt would be projected to stand below 60 % of GDP by 2041 under all deterministic stress tests of the Commission's Debt Sustainability Analysis. Therefore, based on the plan's policy commitments and macroeconomic assumptions, the net expenditure path put forward in the plan is consistent with the requirement for debt as set out in Articles 6(a) and 16(2) of Regulation (EU) 2024/1263. Implications of the plan's net expenditure commitments for the general government balance (20) Based on the plan's net expenditure path and assumptions, the general government deficit would decline from 7,9 % of GDP in 2024 to 2,5 % of GDP in 2031, the first year when it would be below 3 % of GDP. Thus, according to the plan, the general government balance would not exceed the 3 % of GDP reference value at the end of the adjustment period (2031). In addition, in the ten years following the adjustment period (i.e. until 2041), the government deficit would not exceed 3 % of GDP. Therefore, based on the plan's policy commitments and macroeconomic assumptions, the net expenditure path put forward in the plan is consistent with the requirement for the deficit as set out in Articles 6(b) and 16(2) of Regulation (EU) 2024/1263. Time profile of the fiscal adjustment (21) The time profile of the fiscal adjustment, measured as the change in the structural primary balance, as described in the plan, is linear, as required by Article 6, point (c) of Regulation (EU) 2024/1263. As a result, the fiscal adjustment over the first four years of the plan is proportional to the total adjustment effort. Therefore, based on the plan's policy commitments and macroeconomic assumptions, the net expenditure path put forward in the plan is consistent with the no-backloading safeguard clause set out in Article 6, point (c), and the transitional provision in Article 36(1), point (e), of Regulation (EU) 2024/1263. ELI: http://data.europa.eu/eli/C/2025/647/oj 5/21 EN OJ C, 10.2.2025 Table 4: Structural primary balance developments in Romania's plan 2023 2024 2025 2026 2027 2028 2029 2030 2031 Structural primary balance - 4,1 - 5,3 - 4,3 - 3,3 - 2,3 - 1,3 - 0,3 0,7 1,7 (% of GDP) Change in structural primary n.a. 1,0 1,0 1,0 1,0 1,0 1,0 1,0 1,0 balance (pps.) Source: Medium-term fiscal-structural plan of Romania. Consistency of the plan with the excessive deficit procedure (22) The net expenditure path set out in the plan is in line with the requirements under the excessive deficit procedure (in particular with the minimum annual structural adjustment established in Article 3(4), third subparagraph of Council Regulation (EC) 1467/97). Consistency of the plan with the deficit resilience safeguard (23) The requirement of the preventive arm set out in Article 8 of Regulation (EU) 2024/1263 regarding the deficit resilience safeguard, which aims to provide a common margin relative to the deficit reference value of 3 % of GDP, does not apply to Romania, as the deficit is planned to be brought below 3 % of GDP only in the last year of the adjustment period. Consistency of the plan with the debt sustainability safeguard (24) According to the plan, government debt will be between 60 % and 90 % of GDP between 2027 and 2031. However, as according to the plan the government deficit would go below 3 % of GDP in 2031, which would result in an abrogation of the decision establishing the existence of an excessive deficit in the year after the end of the adjustment period, the debt sustainability safeguard does not apply during the period covered by the plan. Macroeconomic assumptions of the plan (25) The plan is based on a set of assumptions which differs from the Commission's assumptions transmitted to Romania on 21 June. In particular, the plan uses different assumptions for five variables, namely the starting point (structural primary balance in 2024), potential and real GDP growth, GDP deflator growth and it takes into account the assumed depreciation of the national currency. An assessment of these differences in assumptions is provided below. The differences in assumptions with the most significant impact on average net expenditure growth are listed below, together with an assessment of each difference considered in isolation. — The plan assumes a worse initial position compared to the Commission's assumption. The structural primary balance was - 4,4 % of GDP in the prior guidance transmitted to Romania in June 2024 and is - 5,3 % of GDP in the plan. The lower structural primary balance in the plan reflects higher government spending in the first three quarters of the year, driven by fast increases in public wages, capital expenditure and social transfers. The 2024 primary balance projection in the plan is very close to that of the Commission autumn forecast and is realistic. Consequently, this assumption is deemed to be duly justified. It contributes to a lower average net expenditure growth over the adjustment period in the plan than according to the Commission's assumptions. — The plan assumes potential GDP growth to be lower in 2024 and higher in 2026–2028 compared to the prior guidance of June 2024. Overall, the series are similarly stable as the ones in the prior guidance. This contributes to higher average net expenditure growth over the adjustment period in the plan than according to the Commission's assumptions. The possibility to use alternative potential growth assumptions is in line with Article 36(1)(f) of Regulation (EU) 2024/1263, provided that cumulative growth over the projection horizon (i.e. up to 2041) is broadly in line with the Commission's assumptions, which is the case in the plan. Consequently, this assumption is deemed to be duly justified. — The plan assumes a lower GDP deflator growth for 2025 compared to the prior guidance of Spring 2024, which results in lower growth rates of the GDP deflator throughout the adjustment period using the medium-term linear convergence rule starting from that lower level. This contributes to lower average net expenditure growth over the adjustment period in the plan than according to the Commission's assumptions. This assumption is cautious and therefore duly justified. 6/21 ELI: http://data.europa.eu/eli/C/2025/647/oj OJ C, 10.2.2025 EN — The Plan takes adequately into account its assumption of a depreciating RON exchange rate vis-à-vis the EUR in the debt trajectory. This assumption is deemed to be duly justified and contributes to a lower average net expenditure growth over the adjustment period in the plan than according to the Commission's assumptions. The remaining difference in assumptions does not have a significant impact on average net expenditure growth compared to the Commission's assumptions. Overall, all the differences in assumptions taken together lead to an average net expenditure growth in the plan that is lower than the reference trajectory. The Commission will take into account the above assessment of the plan's assumptions in future assessments of compliance with this recommendation. Fiscal strategy in the plan (26) According to the indicative fiscal strategy in the plan, the commitments on net expenditure will be delivered mainly through expenditure restraint. The ratio of government primary expenditure to GDP is projected to decline from 40,6 % in 2024 to 34,6 % in 2031, i.e., 6 pps. over 7 years. All expenditure categories are projected to decline as a share of GDP. This commitment is supported to some extent by the expenditure reforms presented in the plan (spending reviews, pension reforms, reform of state-owned enterprises governance) but rigorous implementation, and additional measures relative to those included in the plan, will be necessary to achieve the targets. The specification of the policy measures is to be confirmed or adjusted and quantified in the annual budgets. (27) At the same time, there are risks to the implementation of the indicative fiscal strategy in the plan. Most of these commitments will have to be implemented by a new government. Moreover, on 20 November 2024, the Minister of Labor and Social Solidarity announced an increase of 12,1 % in the reference point value for pensions. This announcement implies a much larger (about 1 % of GDP) increase in pensions than seems to be assumed in the plan, i.e. a nominal freeze in pensions in 2025. Set of reform and investment commitments in the plan to underpin an extension of the fiscal adjustment period (28) In the plan, Romania commits to a set of reforms and investments aiming to improve potential growth and fiscal sustainability, to underpin an extension of the fiscal adjustment period from 4 to 7 years. The set of reforms and investments underpinning an extension of the adjustment period is composed of several commitments from the recovery and resilience plan (RRP); some commitments from the RRP with additional specifications; as well as some new reforms. This includes the following measures (see also Annex II): — Pension reform and reform of special pensions. These two reforms are existing RRP measures and correspond to milestones 213, 214, and 215 on the reform of the public pension system of Romania's RRP that have already been adopted. Full implementation of these reforms would significantly contribute to fiscal sustainability, but most of the impact will materialise over the long run. The reform of special pensions foresees a gradual alignment of replacement ratios of special pensioners with that prevailing in the general system. The pension reform involves a complete overhaul of the system, with recalculation of all pensions in a way that better reflects the contributory principle. The reform also includes provisions that encourage longer working lives: it provides bonus points for long contribution periods and links the statutory retirement age with developments in life expectancy. The fiscal impact of these reforms has been quantified by the World Bank. — Minimum wage reform. This reform commitment is additional to milestone 392 of the RRP ensuring minimum wage setting and introduces a new system for setting the gross minimum wage, based on the projected inflation and productivity growth rates by an independent institution, while ensuring that the minimum wage remains within a certain range relative to the average wage. The reform aims to improve predictability of minimum wage updates, supporting the avoidance of ad hoc increases with potential negative impact on cost competitiveness. The reform will be implemented in 2025 and is expected to generate extra revenue worth 0,1 % of GDP. — Reform of the public sector remuneration system. The reform commitment is additional to milestone 420 of