Dan Pălăngean

Senior Expert, National Bank of Romania

The Excessive Deficit of Romania – Context and Possible Sanctions

No. 49, Sep.-Oct. 2024 The excessive deficit procedure is a major factor in fighting the fiscal deficit for Romania, which is expected to rise to approx. 7% of GDP this year. Due to COVID-19, the EU suspended its budgetary rules for all Member States between 2020 and 2023 by activating the general escape clause. As of 2024, the general escape clause is no longer in effect. The EU has therefore relaunched the deficit-based EDP process under the new rules of the revised economic governance framework. More

Social Scoreboard – Romania vs. Poland in the EU

Dan Pălăngean

No. 48, Jul.-Aug. 2024 Eurostat has published the state of play of the Social Scoreboard for Member States, summarised in the evolution of 16 profile indicators. In terms of GDP per capita at standard purchasing power parity, Romania is at 80% of the EU average, on a par with Poland and higher than Hungary, Croatia (76%), Slovakia (73%), Latvia (71%), Greece (67%) and Bulgaria (64%). More

Romania, the Lowest Number of Working Years among the EU Member States

Dan Pălăngean

No. 48, Jul.-Aug. 2024 Last year, Romania recorded the lowest number of years of work among EU member states, according to data published by Eurostat. With an average of only 32.2 years, we ranked below Italy (32.8 years), Croatia (34 years), Greece (34.2 years) and Bulgaria (34.5 years). Which, socio-culturally, shows that we are, simultaneously, both Latins and Balkans. More

The Budget Deficit in the Last 20 Years. Some Observations

Dan Pălăngean

No. 47, May-Jun. 2024 Romania has systematically recorded a negative budget execution result over the last 20 years. Essentially, the idea of the normalcy of the budget deficit has taken root, with the only discussion being about its size. In fact, in the long term, we should aim for a balance between revenues and expenditures. Otherwise, everything we accumulate at specific points, for various reasons (be it justified or not), will translate into systematic interest payments. These payments represented no less than 2.1% of GDP in 2022 (note, 70% of the space allowed by the Maastricht rule of 3%), and in 2023 they represented 1.9% of GDP, one-third of the deficit recorded in public finances. More

High Poverty - Low Education, the Vicious Circle

Dan Pălăngean

No. 46, Mar.-Apr. 2024 A recent report of the European Commission regarding country analysis on Social Convergence Framework (SCF) points out the problems of Romania, where high poverty - low education constitutes a vicious circle. Therefore, the quality, relevance and inclusiveness of education and training should be strongly tackled by public policies to support labour market and improve poverty rates. More

Employees Working Abroad, of Great Importance for Romania

Dan Pălăngean

No. 45, Jan.-Feb. 2024 For France, Romania and Belgium, the positive net balance of personal transfers and compensation of employees reduces their current account deficits significantly, according to data for 2022 published recently by Eurostat. For some countries, net inflows of personal transfers and compensation of employees are important sources of external funding and contributors to a recipient’s disposable income and GNI.Romania considerably reduced its negative current account balances through these net inflows, with €7.4 billion (see Figure 1). The current account deficit for Romania would have been €33.5 billion instead of €26.1 billion, which includes transactions related to personal transfers and compensation of employees. More

Romania, Second Lowest Price Level in the EU for 2022

Dan Pălăngean

Romania had the second lowest price level in the EU for the year 2022, with a value of 59.3% relative to the European average. Bulgaria was first, with an index of 58.5%, and above our country were situated Poland (60.7%), Hungary (67.7%), Croatia (73.5%), Lithuania (78.8%) and Czechia (84.3%).*In 2022, the highest price level for consumer goods and services among the EU Member States was observed in Denmark (49% above the EU average) and the lowest in Bulgaria and Romania (41% below the average). More

The Median Disposable Income in the EU

Dan Pălăngean

In 2022, the median disposable income was 18.706 PPS per inhabitant in the EU, one-third of it was received as social transfers from governments (e.g. pensions, social benefits, etc.). Compared with 2010, EU’s median disposable income in real terms increased by 20% in 2022. Romania was first among the member states, with a 126% increase.EU median annual disposable income per inhabitant stood at 18.706 PPS in 2022. It varied considerably across the EU Member States and ranged from 9.671 PPS in Bulgaria and 9.826 PPS in Slovakia to 33.214 PPS in Luxembourg and 25.437 PPS in the Netherlands. The highest levels of income per inhabitant were recorded in Central and Nordic EU Member States. Romania was placed third place from the rear (10.033 PPS), although the level of GDP per inhabitant is currently above the ones in other six European countries. This signifies an increased inequality in relative terms. More

Romania, the Highest Share of Children in Poverty or Social Exclusion in 2022

Dan Pălăngean

Among the EU member states in 2022, the highest share of children at risk of poverty or social exclusion was recorded in Romania, according to Eurostat data. The percentage of 41.5% (same as in the previous year) was well above those for Bulgaria (33.9%) and Spain (32.2%). On the other hand, the lowest shares were reported in Slovenia (10.3%), Czechia (13.4%) and Denmark (13.8%).Children who grow up in poverty or social exclusion encounter difficulties in doing well in school, enjoying good health and realising their full potential later in life. They also face a higher risk of becoming unemployed, poor and socially excluded as adults. More

Foible Taxation, the Main Cause of Public Deficit

Dan Pălăngean

As a ratio of GDP, in 2021 tax revenue (including net social contributions) accounted for 41.7% of GDP in the European Union (EU) and 42.2% of GDP in the euro area (EA-19). The ratio tax revenue to GDP was highest in Denmark (48.8%), France (47.0%) and Belgium (46.0%), followed by Austria (43.7%), Italy (43.6%), Sweden (43.5%) and Finland (43.1%); the lowest shares were recorded in Ireland (21.9%), Romania (27.3%), Bulgaria (30.7%), Latvia (30.8%), Malta (31.2%) and Lithuania (32.6%). This situation makes taxation the main cause of public deficit. With public revenues even as low as Bulgaria or Latvia, Romania wouldn’t be outside the maximum 3% of GDP requirement for deficit. More

Romania 2022 – Highest Share of People at Risk of Poverty or Social Exclusion in the EU

Dan Pălăngean

In 2022, the shares of people at risk of poverty or social exclusion varied across the EU countries, with highest values reported in Romania (34%), Bulgaria (32%), Greece and Spain (both 26%). On the other hand, the lowest shares were recorded in three states from the former Eastern Bloc: Czech Republic (12%), Slovenia (13%) and Poland (16%).95.3 million people in the EU (22% of the population) were at risk of poverty or social exclusion, i.e. lived in households experiencing at least one of the three poverty and social exclusion risks: risk of poverty, severe material and social deprivation, and/or living in a household with very low work intensity. The figure remained relatively stable compared with 2021 (95.4 million, 22% of the population). More

One Fifth of Young Romanians, Neither in Employment Nor in Education or Training

Dan Pălăngean

Last year, one fifth of young Romanian people were neither in employment nor in education or training (NEET), according to data compiled and published by Eurostat. It is the largest proportion in any EU Member State, well above the European average and the situation deteriorated in the last ten years, as opposed to the progress recorded in neighboring countries.*In 2022, 11.7 % of 15-29 year-olds in the EU were neither in employment nor in education and training.* The proportion of 15-29 year-olds in the EU neither in employment nor in education and training in 2022 ranged from 4.2 % in the Netherlands to 19.8 % in Romania. More