09.06.2022

ROMANIA DOES NOT MEET THE CRITERIA FOR THE EURO AT ALL

Romania does not meet four of the criteria needed to adopt the euro, and is the only one of the seven countries assessed to be subject to an excessive deficit procedure, the Adevarul newspaper reported, citing the European Commission's Convergence Report. The report assesses the progress of Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania and Sweden on their path to the eurozone.

According to the report's conclusions, only Croatia and Sweden meet the criterion on price stability; all countries meet the public finance criterion, with the exception of Romania, which is the only country facing an excessive deficit procedure; Bulgaria and Croatia meet the exchange rate criterion; Bulgaria, the Czech Republic, Croatia and Sweden meet the long-term interest rate criterion. The European Commission has concluded that Croatia meets all the convergence criteria and is ready to adopt the euro on 1 January 2023.

Romania has not yet officially announced a deadline for joining the eurozone, local media reported. Even before the war in Ukraine began, Finance Minister Adrian Kachu said 2029 was a real goal for joining the euro. The previous deadlines officially adopted by the government were 2024 and 2019. Romania's likely future prime minister in May 2023, Marcel Colacu, who now heads the Chamber of Deputies, recently said the country's priority is Schengen and OECD membership.

To give up the leu, Romania must have a budget deficit of up to 3 percent of GDP, government debt must be up to 60 percent of GDP, and inflation must not exceed by 1.5 percentage points the average inflation of the three eurozone members with the highest -good results.

According to the EC's spring economic forecasts, Romania will have economic growth of 2.6% in 2022 and 3.6% in 2023. The budget deficit is expected to reach 7.5% of GDP this year and 6.3% in 2023 Government debt is projected to be 50.9% of GDP in 2022 and 52.6% in 2023, according to the forecast.

In the Convergence Program 2022-2025, which was sent to the EC, the government of Prime Minister Nicolae Chuca was content to write only that "Romania maintains its commitment to join the eurozone, but the government's efforts are currently focused on preventing the economic and social crisis following the Covid-19 pandemic and reducing the negative effects of the military conflict in Ukraine."

The last commitment to join the eurozone was made (but only orally) early last year by then-Prime Minister Florin Katsu, who said in February 2021 that Romania could adopt the euro in 2027 or 2028.