Romania stands at a critical crossroads in its National Recovery and Resilience Plan (PNRR) implementation, facing the stark risk of losing approximately 7.8 billion euros in European funding, according to Marcel Boloș, the former Minister of Investments and European Projects. This alarming situation emerges amid the conclusion of intense, informal negotiations with the European Commission (EC) over the PNRR grant and loan components, negotiations marked by stringent conditions reflecting Romania's fragile fiscal health and sluggish investment progress.
Since the PNRR was launched, Romania has been allocated a total of 28.2 billion euros, split between 13.2 billion euros in non-reimbursable grants and 14.9 billion euros in loans. However, the European Commission has imposed tough rules requiring that investments under the PNRR, whether funded by grants or loans, must reach at least 50% physical progress by the deadline of August 31, 2026, to secure the funds. Failure to meet this threshold risks significant cuts, particularly to the loan portion, which offers Romania a rare opportunity for low-cost borrowing at interest rates between 1.5% and 2%, compared to the current market rates around 8%.
Boloș explained that the inflexible conditions stem from Romania’s fragile fiscal situation, exacerbated by a lack of coordination between fiscal reforms and public spending, alongside a very slow pace of investment implementation. These factors combined to make the negotiation process "a tough exercise" for Romania, with the looming danger that vital infrastructure projects could lose their European funding.
Among the most vulnerable sectors are healthcare, environmental infrastructure, education, energy efficiency, and transport. Specifically, nearly 920 million euros in health investments—largely focused on public hospital modernization—are at risk. Environmental projects, particularly water and sewage infrastructure and waste management, face exposure of around 2.29 billion euros. Education projects risk losing over 700 million euros, energy efficiency investments about 1.02 billion euros, and transport infrastructure nearly 1.98 billion euros. Additionally, digitalization efforts for small and medium enterprises and energy renovations under the Repower EU initiative face a potential loss of 728 million euros.
These funding risks threaten to derail key modernization efforts, forcing Romania to potentially cover these costs from its state budget or through Cohesion Policy funds, options that would strain national finances. Boloș warned that some projects have already stalled, with certain financing contracts lacking finalized public procurement contracts, others caught in procurement procedures, and some construction sites open but failing to meet the required physical progress.
He lamented that despite attempts to propose new investment projects during the renegotiation to offset the 7.8 billion euro loss, Romania’s current budgetary constraints have made such efforts impossible. Alternative suggestions, like channeling these funds into the capital of the Investment and Development Bank or financing financial instruments for SMEs, were also unfeasible at this time.
As of mid-2025, Romania has effectively received about 10.7 billion euros from the PNRR, including pre-financing and partial payments. Payments to beneficiaries total 8.23 billion euros, split among grants, loans, national public financing, and VAT. However, approximately 20 billion euros remain to be paid to complete all projects within the deadline—a target many experts now regard as nearly impossible.
Adding to the complexity is the so-called Request for Payment no. 4, a package of crucial reforms considered the cornerstone for continuing the PNRR. This includes fiscal reform, taxation of polluting transport, a new salary law, the Urban Code, Forestry Code (which depends on reorganizing Romsilva), Energy Law with secondary legislation for offshore energy, Water Law, national biodiversity strategy, and the hydrogen (H2) strategy. Boloș emphasized that this request cannot be submitted to the European Commission until the renegotiation process officially concludes.
Highlighting the gravity of the situation, Boloș noted that the PNRR is one of the most complex dossiers he has managed, representing a massive construction in motion, filled with hope but also marked by steps sometimes taken faster than feasible. He stressed that saving what remains of the plan requires transparency, responsibility, and strict adherence to deadlines.
Looking ahead, Boloș outlined that the only viable path to salvage the PNRR is through renegotiation with the European Commission, a step many member states have taken to shield themselves from losing allocated funds. Following renegotiation, Romania must identify alternative solutions, such as phasing projects, leveraging national budgets, tapping into Cohesion Policy funds, and seeking support from European financial institutions like the Investment and Development Bank.
Moreover, accelerating the implementation pace and holding reform coordinators accountable are critical to avoid further delays and blockages that could jeopardize the entire timeline. "It’s not easy, and it can’t be solved overnight," Boloș acknowledged, urging patience and decisive action to rescue parts of the plan.
Two major risks loom large: first, the potential loss of 7.8 billion euros from the PNRR, which would likely come from the loan portion and represents a cheap source of investment funding; second, the risk that investments totaling 26.9 billion euros—calculated as the difference between the 46.9 billion euros in financing contracts and the updated PNRR value of 20.4 billion euros—may remain unfunded or be forced onto the state budget.
Ultimately, the decisions made by the Romanian government in the coming months will determine whether the country can navigate this precarious juncture. The stakes are high, with the livelihoods of people and institutions relying on these investments hanging in the balance. As Boloș put it, many projects "risk remaining only on paper" without clear funding sources, underscoring the urgency of decisive and transparent governance.
