European report: Romania ranks 22nd out of 27 in the absorption of non-repayable funds

At the end of 2025, Romania ranked 22nd out of the 27 European Union member states in terms of the rate of grant payments from the Recovery and Resilience Facility, according to the European Court of Auditors' report on the EU budget published overnight. While France, Austria, and Croatia had surpassed the 80% threshold, Romania had not even reached the halfway mark of the non-repayable funding allocated under the revised plan. At 47.2%, Romania ranked just behind Sweden (47.8%) and ahead of Lithuania and the Netherlands (both at 46.3%). Bulgaria had reached 53%, Greece 66.1%, Spain 69%, and Italy 75.4%. With only 47.2% of the revised allocation received, the country stood 18.8 percentage points below the EU average, according to the cited document.

The ranking measures grant payments relative to revised allocations, excluding administrative costs. It reflects the situation at the end of 2025-not an up-to-date tally for 2026-and does not rank the quality of reforms or investments. The 47.2% figure relates exclusively to the non-repayable component of the facility, not the entire Recovery and Resilience Plan (PNRR), which also includes loans. Regarding the NRRP, Lucian Romaşcanu, a member of the European Court of Auditors, stated yesterday during a press conference for the domestic media: "There was immense pressure to meet milestones at the last minute. The same thing will likely happen with the 2021-2027 Multiannual Financial Framework, where the average European absorption rate is around 30%; Romania is currently at about 36%. When there is intense pressure to meet objectives, there is a temptation-a tendency-to steer the outcome toward what is actually being evaluated. What we found was a "flexibilization' of milestones: instead of implementing the milestone exactly as defined in the national programs, they scaled back the milestones' characteristics so they would fit within the acceptable parameters. This raises a major question mark regarding the new Multiannual Financial Framework as well, which will be largely structured around these types of programs-modeled on the Recovery and Resilience Facility. And without a clear method for defining milestones-featuring traceable costs and rigorous assessment of their completion-it will be very difficult. First, it will be a daunting task for the Court to evaluate everything taking place there; second, it will be extremely risky for the Commission regarding how payments are made and costs reimbursed. This is an issue we are analyzing, and we are waiting to see how the Commission will arrange themselves for managing the new annual financial framework, and the Court will organize its activities accordingly.”

The rapid absorption of European funds has a direct economic impact-a fact noted in reports by both the National Bank of Romania and international rating agencies (Fitch, Moody's, and Standard & Poor's): a European allocation can only foster development if the commitments enabling payment are met and the funding actually yields the promised results.

Consequently, the receipt of funds hinges on verifiable reforms and investments. Payments from the Commission to the state should not be automatically equated with amounts spent by final beneficiaries or with completed projects. It is precisely the link between commitments, verifications, and results that lies at the heart of the European auditors' warning.

• What the ECA report data means for investors

Romania's 22nd-place ranking in RRF grant payments at the end of 2025 marks the starting point of a year of accelerated recovery. For investors, however, the relevant comparison goes beyond the ranking itself; what matters is how much of the outstanding funding has actually been transferred, how much still depends on the Commission's assessment, and what happens to projects where European funding is reduced or delayed.

The first definite shift occurred on June 23, 2026, when the European Commission paid Romania euro2.25 billion in grants for payment request number 4. This request had been submitted on December 19, 2025, and covered 38 milestones and 24 targets. The figure of euro2.62 billion announced upon the positive assessment differed from the net transfer, as the actual payment excluded the pre-financing already provided.

Two further payment requests followed. Request No. 5 was submitted on August 14, 2026, with a total value of euro2.84 billion. According to the Minister of Investments and European Projects, Dragoş Pîslaru, the net amount comprised approximately euro1.65 billion in grants and euro433 million in loans, covering 75 targets and milestones. It should be noted that the submission of the request does not, in itself, demonstrate the actual receipt of the funds.

The final request, number 6, was submitted on September 30. Minister Dragoş Pîslaru stated that the gross value exceeds euro6 billion, while the net amount requested is approximately euro4.3 billion-with nearly euro2.6 billion in grants and the remainder in loans. In effect, the two requests combined represent approximately euro6.4 billion in potential net transfers, of which about euro4.25 billion consists of grants. Unfortunately, as of press time, neither request has been paid out by the European Commission. Consequently, for the purpose of assessing the situation for investors, these amounts must currently be categorized as requested funding.

For construction companies, equipment suppliers, technology firms, and businesses involved in public projects, an acceleration in the receipt of European funds can support the liquidity of public authorities and facilitate the reimbursement of eligible expenses. This is an economic implication, not a guarantee that every invoice will be paid immediately. The transfer to the state, the payment to the beneficiary, and the receipt of funds by the contractor are distinct stages. A company's situation depends on the specific contract, the formal acceptance of the work, the eligibility of expenses, and the beneficiary's capacity to make the payment.

For investors financing projects through equity or loans, the primary risk is that an investment initiated with European funding might subsequently require national funding. This shift can extend the payment timeline and create competition with other public expenditures.

For the economy, completed projects deliver lasting benefits in terms of infrastructure, services, and productive capacity, whereas the mere submission of a funding request only improves the outlook for financing.

• Two year-end scenarios for investors

Based on payment requests 5 and 6, year-end estimates should be built around scenarios rather than the assumption that all requested amounts will be fully received.

In the investor-friendly scenario, assessments confirm the majority of commitments, final payments are authorized, and settlements allow for project closure without placing major additional strain on companies. In an intermediate scenario, Romania receives a significant portion of the funding, but reductions force the national budget to absorb some of the costs.

In the unfavorable scenario, further reductions and settlement delays impact contractors' working capital and limit the funds available for new investments. It should be noted that these scenarios represent economic interpretations of risks rather than official forecasts.

For bond investors and foreign capital, the NRRP (PNRR) serves as a support mechanism for Romania's external financing. In its assessment published in May 2026-and reiterated on October 2, 2026-S&P projected economic growth of just 0.25% for the year, with EU fund inflows amounting to approximately 3% of GDP and foreign direct investment (FDI) at around 2% of GDP. The S&P Global Ratings forecast highlights the critical importance of European funding during a year characterized by weak consumption and fiscal adjustment. While the receipt of grants can alleviate pressure on public and external financing, it does not automatically resolve issues regarding the budget deficit, borrowing costs, or fiscal uncertainty. Not every billion received under the RRF can be automatically translated into a fixed contribution to GDP growth; the effect depends on the timing of project execution, the necessary imports, and the productivity of the investments.

Therefore, the outlook for the end of 2026 is more positive than the ECA report suggests for the end of 2025, though it remains contingent upon European Commission decisions regarding the final two payment requests, as well as actual transfers and project disbursements.

• The situation at the European level

The ECA report indicates that by the end of 2025, out of euro359.9 billion in grant commitments under the Recovery and Resilience Facility, euro237.5 billion had been paid out across the 27 EU Member States. A further euro122.4 billion remained for the facility's final year. Only France, Austria, and Croatia had received at least 80% of their revised allocations, with rates of 84.8%, 84.1%, and 81.8%, respectively. Grant payments during 2025 totaled euro40.1 billion-representing just 62% of the euro65 billion projected by the Commission in June 2024.

Court auditors also identified payments authorized in instances where conditions had not been met. Out of 420 milestones and targets examined, 16 were affected by findings with financial implications, concerning nine payments to nine Member States. Ten findings concerned the unsatisfactory fulfillment of milestones and targets, four related to non-compliance with the eligibility period, and two to double funding.

The auditors' conclusion is explicit: "Following the checks carried out by the Court, 10 milestones and targets across 7 Member States were identified as not having been satisfactorily fulfilled. The Court found that not all elements required by the milestone or target had been met, and these missing elements represented more than a minor, acceptable deviation. Yet, the Commission had made the corresponding payments.”

Auditors at the European institution consider that these situations undermine the mechanism's core guarantee: funding granted in exchange for the fulfillment of obligations.

One finding in the report concerns the modification of obligations after payment requests had been submitted. The European Court of Auditors examined 32 modifications regarding 20 milestones and targets across eight Member States. In the case of 13 milestones and targets, requirements had been changed after the payment request was submitted. For 17 modifications, the objective circumstances were sufficiently described but the evidence was insufficient; in another 12 cases, both the explanations and the evidence were inadequate.

The report states: "Several milestones and targets were revised during the Commission's preliminary assessment and aligned with actual achievements, thereby facilitating RRF payments. However, the Court's analysis shows that these modifications were frequently made without sufficient explanations or adequate supporting evidence regarding the objective circumstances, as required.”

In some cases, the revision even removed elements of the implementation. "The Court identified five amendments to Council implementing decisions that removed, either wholly or partially, the part of the measure relating to the implementation stage. These cases show that certain amendments to Council implementing decisions went beyond merely adjusting deadlines or technical specifications; they removed-wholly or partially-deliverables that were originally key elements for completing the measures," the ECA report states.

According to the Court's auditors, there is a risk that funding might reward commitments that are scaled back compared to those originally undertaken. The auditors warn that, in some instances, payments have become linked more to resources and preparatory processes than to the promised results.

Consequently, Tony Murphy, President of the European Court of Auditors, stated yesterday at a press conference regarding the report: "Ambitious budgets require equally ambitious safeguards. If the EU shifts to a new budgetary model where funding is no longer linked to costs incurred, we must learn from experience and remedy the shortcomings identified so far, ensuring that EU funds deliver the expected results for citizens."

The ECA President's warning concerns negotiations for the 2028-2034 EU budget, which is expected to largely replicate the architecture of the Recovery and Resilience Facility. The ECA fears that the vulnerabilities of a temporary instrument-created for post-pandemic recovery-could thus be carried over into a much larger-scale funding system. When asked by the media about the ECA's proposal for the 2028-2034 MFF, Tony Murphy stated that he wants an estimated cost for each measure, which would provide a better basis for recovering funds if a target is only partially met.

Regarding amendments to EU Member States' Recovery and Resilience Plans (RRPs), the ECA President noted that many key implementation steps had been removed from the milestones and targets, that there were weaknesses in cost estimates, and that auditors identified 99 amendments made to allow for the disbursement of the full amount of originally allocated funds.

• One trillion euros - the value of European borrowing by early 2027

The ECA report also indicates that the European Union is borrowing increasingly large amounts. By the end of 2025, the EU's outstanding debt stood at euro738.9 billion, up from euro601.3 billion the previous year-an increase of over 20% compared to the 2024 figure. ECA auditors estimate that this amount could reach approximately euro1,000 billion by early 2027, driven primarily by the NextGenerationEU (NGEU) initiative. This debt is contracted at the Union level and is distinct from the public debt of individual Member States.

Interest payments alone for the non-repayable support component of NGEU are estimated at approximately euro93 billion for the 2028-2034 period. Therefore, the Commission proposes a fixed annual allocation of euro24 billion, in current prices, for interest and principal repayments. Interest payments take priority, and the remaining funds would be used for the principal.

The ECA report explains the consequence: "To achieve a steady and predictable reduction in payment obligations, as required, the Commission will need to refinance maturing debt by issuing new debt instruments to pay off the old ones as they fall due. The Commission has not published a comprehensive repayment strategy for NGEU extending to 2058."

Repayment must begin in 2028 and be completed no later than 2058. Decisions regarding post-pandemic recovery will therefore have consequences for several generations of European budgets. Therefore, the Court calls for a strategy covering the entire period and addressing macroeconomic, financial, refinancing, interest rate, liquidity, and market risks.

Tony Murphy, President of the ECA, stated at yesterday's press conference: "The Commission underestimated borrowing costs: the cost was euro5 billion in 2025, and is projected to reach euro8 billion in 2026 for debt servicing alone-an obligation representing approximately 8% of the budget (i.e., nearly euro30 billion annually) and constituting a priority, mandatory payment. The more we pay in interest, the less money remains for principal repayment or traditional EU policies."

ECA auditors also point out that payment delays are already affecting the European treasury. The Commission raises funds through borrowing in advance, based on projected needs. When actual transfers fall short of estimates, cash accumulates. By the end of 2025, the EU held cash balances totaling euro103 billion, euro65 billion of which originated from borrowing. The report notes that RRF payments coming in lower than forecast contributed to this increase in cash holdings. At the same time, the EU budget's exposure to loans and guarantees had reached euro406.8 billion-19% above the 2024 level-and could rise to approximately euro664 billion by 2027. This exposure entails risks and obligations that could impact the budget should beneficiaries fail to repay loans or should guarantees be called upon.

Tony Murphy warns that European Union borrowing entails real obligations for Member States, and rising financing costs could reduce the funds available for debt repayment. According to the ECA President, if a Member State defaults, the obligation falls upon all Member States. Absent unanimous agreement on introducing new own resources, debt servicing would consume 8% of the general EU budget.

Regarding these issues, Lucian Romaşcanu stated: "At one point, there was a proposal to create a separate chapter within the European Union budget to manage or accumulate funds for debt repayment. Some states opposed this, so each state will remain responsible for its own repayments; naturally, given the widespread rise in national debt, this could prove to be a difficult additional burden to manage. Nevertheless, these are extremely firm, multiannual commitments enshrined in national budgets, leading me to believe there will be no cessation or reduction of these payments-though the budgetary effort required will be substantial."

• Errors estimated by the European Court of Auditors

Control issues also affect traditional budgetary expenditure. The estimated error rate rose to 3.8% in 2025, up from 3.6% in 2024, and the Court issued an adverse opinion for the seventh consecutive year. This rate measures expenditure that does not comply with applicable rules; it is not an indicator of fraud, inefficiency, or waste. EU accounts are considered reliable, and revenue is not affected by a significant level of error.

For the "Cohesion, resilience and values" heading, the estimated rate reaches 6.6%, while for "Natural resources and environment" it stands at 3.9%. Lucian Romaşcanu, a member of the European Court of Auditors, stated: "Cohesion Policy and the Common Agricultural Policy account for 60% of EU budgetary expenditure and are, consequently, the most prone to errors. Regarding the types of errors or discrepancies we encounter, the main issues arise in the area of eligibility-concerning both beneficiaries and costs-as well as in public procurement. These generally represent the largest share. However, it is important to emphasize that errors themselves should not automatically be equated with fraud. In most cases, the objective of the expenditure may well have been achieved and the projects successfully completed. What the European Court of Auditors does is draw the Commission's attention to instances where the rules, regulations, or the procedures for accessing these funds did not comply with applicable norms. This is why there is a higher incidence of issues in the areas of cohesion and agriculture: they are the most exposed to non-compliance regarding eligibility and public procurement."

Delays can exacerbate these vulnerabilities. Regarding cohesion funds, the report warns: "Slow absorption can place additional pressure on Member States to spend available funds as the end of the programming period approaches, and could reduce the effectiveness of controls carried out by managing and audit authorities." At the end of 2025, the cumulative absorption for the three main cohesion policy funds was 14.8%, compared to 24% at the corresponding stage of the previous financial framework. Therefore, negotiations for the next European budget will have to reconcile the funding of an ever-growing number of priorities with debt obligations.

Tony Murphy, President of the ECA, warned: "If the proposed new revenue sources are not approved, the EU budget could face a significant shortfall, necessitating either an increase in Member State contributions or a reconsideration of the overall level of ambition for policies funded by the European budget. This is particularly relevant given that, for the 2028-2034 multiannual financial framework, 20% of the proposed budget-amounting to euro2 trillion-relies on new revenue sources that have not yet been approved."

He concluded that, in the future, ambitious budgets will require equally ambitious guarantees, and that accountability and transparency across the entire system must be strengthened.