Romania’s path to the Eurozone: optimism meets fiscal reality

President Nicușor Dan has reignited discussions about Romania’s potential entry into the eurozone, stating on Thursday evening that the country could fulfill the necessary conditions within the next 3-4 years.

He emphasized the substantial economic advantages of this integration, arguing that deeper alignment with the eurozone would enhance productivity by enabling companies to operate across larger markets, ultimately leading to better-paid jobs for Romanians.

“Romania’s transition to the eurozone is beneficial,” Dan declared. “The more your economy is integrated into an economy that allows companies to operate in large spaces, the more productive those companies will be, the more you will have better-paid jobs in your country.”

He acknowledged the well-known Maastricht criteria, including limits on deficit and debt levels, but expressed confidence that Romania could target compliance within this timeframe.

Challenges and the government’s cautious stance

In contrast, Prime Minister Ilie Bolojan has offered a more measured perspective, underscoring that Romania currently falls short of these requirements, primarily due to persistently high budget deficits.

Speaking at the end of January, Bolojan explained that recent years have seen very large deficits, and meaningful progress depends on bringing the shortfall below 3% of GDP. The government has committed to a gradual reduction, aiming for around 6.2-6.3% this year and approximately 3% by 2030. Until that threshold is reliably achieved, he noted, eurozone accession cannot realistically enter the active agenda. Bolojan highlighted the political dimension as well, suggesting that the issue could become a central priority during the 2028 parliamentary elections, where major political forces might forge a broad consensus—much like the cross-party agreements that facilitated Romania’s earlier accessions to the European Union and NATO.

Bulgaria’s successful adoption of the euro on 1 January 2026, as the 21st member of the eurozone, has sharpened regional comparisons and added pressure on Bucharest. While Bulgaria met the convergence criteria after years of preparation, including participation in the Exchange Rate Mechanism (ERM II), Romania remains outside both the eurozone and ERM II.

Analysts, including those cited by Reuters, indicate that stabilizing public finances will require several more years, given Romania’s position as the EU member with the largest budget deficit. A Eurobarometer survey reflects moderate public support, with around 59% of Romanians favoring the euro, yet stabilizing finances stands as the primary hurdle amid high inflation, austerity measures, and rising political polarization from the far right ahead of 2028.

Adopting the euro demands strict adherence to the Maastricht convergence criteria: a budget deficit below 3% of GDP, sustainable public debt, price stability with inflation rates close to the EU’s best performers, convergence of long-term interest rates, at least two years of participation in ERM II without major tensions, and legal convergence ensuring central bank independence. Romania’s current economic landscape presents clear obstacles, as fiscal consolidation involves tough choices on expenditure control, revenue enhancement, and administrative efficiency.

Late last year, Romania introduced a series of aggressive fiscal measures to address its ballooning budget deficit, which reached a record 9.3% of GDP in 2024 – the highest in the European Union. In a significant development, Romania’s Constitutional Court rejected a challenge from the opposition Alliance for the Unity of Romanians (AUR) against the key fiscal reform law, dismissing the objections as unfounded. This ruling, issued in December 2025, cleared the path for the most impactful changes to take effect on 1 January.

The tax adjustments affect a wide range of individuals and businesses. Property owners now face substantially higher local taxes on buildings, land, and high-value assets, with rates rising sharply – for instance, up to 0.9% for luxury properties and vehicles previously taxed at lower levels, representing increases of up to 80% or more in some cases, alongside reduced exemptions and new calculation rules supported by the centralized e-Property system. Vehicle taxation has shifted toward pollution-based criteria, further increasing costs for many owners. Dividend income taxation has jumped from 10% to 16% for distributions made on or after 1 January, applying to both individuals and legal entities. Gains from cryptocurrency transfers and certain other investment income, including some capital gains not handled through intermediaries, are now also taxed at 16% (up from 10%), though limited de minimis exemptions remain for small crypto transactions.

Businesses have felt the impact as well, particularly through much stricter penalties for undeclared work. Fines for employing individuals without proper contracts have doubled to around 40,000 lei per undeclared employee, with the cumulative cap raised dramatically to 1 million lei (approximately 196,525 euros or more), scaled according to the number of violations and without a strict upper limit in severe cases.

Benefits, risks, and the road ahead

The potential rewards of eurozone membership are significant. For the economy, it promises greater credibility through reduced exchange-rate risk, easier access to capital markets, heightened appeal for foreign direct investment, and a more stable environment for businesses in the single market. Citizens would benefit from simpler cross-border transactions, improved price transparency, and eliminated currency conversion costs. However, the transition carries challenges: historical examples show concerns over price rounding during changeover, necessitating strong market oversight and consumer protections.

Moreover, joining means relinquishing independent monetary policy, limiting the use of exchange-rate adjustments for economic shocks, and placing greater reliance on fiscal discipline, labor market flexibility, and structural reforms.

Romania is repositioning eurozone accession as a medium-term goal, but success hinges on credible fiscal consolidation, preparations for ERM II entry, and sustained political consensus that endures beyond electoral cycles. With Bulgaria now part of the common currency, a Romanian accession would bolster monetary unity in Southeast Europe – yet it first requires a verifiable path of convergence that withstands social and political pressures. Current discussions point to possible timelines around 2027–2029 or later, contingent on meeting the criteria, while the leu remains the official currency, trading at approximately 1 EUR to 5.09-5.11 RON as of February.

Sources: Digi24, News.ro, IBNA, Reuters

Caption: Romania’s President Nicusor Dan arrives for an informal meeting of the members of the European Council in Brussels, Belgium, 22 January 2026. EPA/OLIVIER MATTHYS