Romania and the euro

The previous Romanian government adopted a self-imposed benchmark for achieving a certain level of real convergence, using it as a guiding reference to determine the appropriate target year for ERM II membership and eventual euro adoption. In March 2023, it set the goal of joining the eurozone’s “antechamber” (ERM II) in 2026 and adopting the euro in 2029. However, these self-imposed targets are outdated and unrealistic, as Romania’s large fiscal deficit is unlikely to allow the country to join the eurozone before 2030, at the earliest.

History

First changes in the Romanian currency

Romania has been an open economy with free capital flow since September 2006, and with total foreign trade exceeding 75% of Gross Domestic Product (GDP) (Isărescu 2007).

Romania's financial market is developing, and experts have noted a trend toward greater efficiency of stock exchange transactions. Consequently, inflows of portfolio investments appear likely to increase. This could become a resource to address the current account deficit. Remittances from Romanian people who work abroad are expected to maintain high levels in the short term. Nevertheless, the country's accession to the EU also gives rise to a new resource capable of covering the deficit, namely transfers from structural and cohesive funds to Romania, as a cohesion country that would be achieved starting in 2008.

The first step required to prepare for the changeover of the leu to the euro took place at the same time as depreciation of the national currency. In 2005 the new Romanian leu was printed with the same physical dimensions as the euro in order to fit the Union's automatic teller machine (ATM) system.

In 2006, the Romanian government announced that the new plan to join the ERM II (a prerequisite for euro adoption) would take place only after 2012 because of significant impediments such as price instability and high interest rates. The president of the European Central Bank said in June 2007 that "Romania has a lot of homework to do ... over a number of years" before joining ERM II. The Romanian government announced in December 2009 their official plan to join the Eurozone by 1 January 2015.

In 2011, the Romanian government announced it would work to comply with the first four convergence criteria by 2013, but the economy would need further reforms to successfully change to the euro.

The delays in adhering to the ERM II

In 2012, the governor of the National Bank of Romania (BNR) confirmed that Romania would not meet its target to join the Eurozone in 2015. He addressed the benefits for Romania to not being a part of the euro area during the European debt crisis, but said that the country would strive to comply with all convergence criteria. Concerns about Romania's workforce productivity were also cited for the delay.

In 2013, Romania submitted their annual Convergence Program to the European Commission, which did not specify a target date for euro adoption. Prime Minister Victor Ponta stated that Eurozone entry is still a fundamental objective for Romania but they cannot enter unprepared, making 2020 a more realistic entry date.

At the same time, the BNR submitted draft amendments for the Romanian Constitution to the European Central Bank (ECB) for review. The amendments would make the BNR's statute an organic law to ensure "institutional and functional stability" and would allow for "transfer of BNR tasks to the ECB and introduction of the Euro as legal tender".

In 2014, Romania's Convergence Report set the target date for the euro adoption as 1 January 2019. According to the Erste Group Bank, Romania would be unable to meet this ambitious target by 2019, not in regard to complying with the four nominal convergence criteria values, but in reaching appropriate levels of real convergence (i.e., raising the GDP per capita from 50% to a level above 60% of the EU average) ahead of euro adoption.

The Romanian Central Bank governor, Mugur Isărescu, admitted the target was challenging, but obtainable if the political parties passed a legal roadmap for implementing required reforms. This roadmap appeared able to lead Romania to entering the ERM II on 1 January 2017 so that the euro could be adopted after two years of ERM II membership on 1 January 2019.

In 2015, however, Isărescu again argued for a delay in the changeover to the euro. Ahead of ERM II entry, Romania would need to conduct monetary adjustments by finalising the process to bring minimum reserve requirement ratios in line with Eurozone levels. Isărescu predicted the process would take twelve to eighteen months; Romania needed to complete major economic policy adjustments by:

• removing the sources of repressed inflation (i.e., completion of energy market deregulation);
• removing sources of quasi-fiscal deficits (by restructuring loss-making state-owned enterprises);
• removing other sources of future budgetary pressures (i.e., unavoidable expenditures to modernise road infrastructure).

As of April 2015, the Romanian government expressed commitment to join all pillars of the Banking Union as soon as possible, and concluded it was still on track to meet its target for euro adoption in 2019, both in regards of ensuring full compliance with all nominal convergence criteria and in regards of ensuring a prior satisfying degree of "real convergence". The Romanian target for "real convergence" ahead of euro adoption, is for its GDP per capita (in purchasing power standards) to be above 60% of the same average figure for the entire European Union, and according to the latest outlook, this relative figure was now forecast to reach 65% in 2018 and 71% in 2020, after having risen at the same pace from 29% in 2002 to 54% in 2014.

In June 2015, Romania's Prime Minister Victor Ponta said that although it had not yet been debated as a concrete political proposal in the government, he was open to the idea of holding a referendum on euro adoption in 2017 or 2018, although he acknowledged this matter would be solely up for the President of Romania to decide. The President, BNR Governor and Finance Minister however did not consider or plan for this referendum idea to be developed any further.

In September 2015, Romania's central bank governor Mugur Isarescu stated that the 2019 target was no longer realistic. The Romanian foreign minister, Teodor Meleșcanu, declared on 28 August 2017 that as Romania currently "meets all formal requirements, it could join the currency union even tomorrow"; but because of a concern also to reach a prior satisfying degree of "real convergence" in order for the euro adoption not to cause negative economic harm towards pensioners and low income people, he thought Romania will only be ready to "adopt the euro in five years, in 2022".

In March 2018, the National Plan for the Adoption of the Euro proposed that the euro would be adopted in 2024, which did not materialize. In March 2018, members of the ruling Social Democratic Party (PSD) also voted at an extraordinary congress to back a 2024 target year to adopt the euro as Romania's currency.

In February 2021, the Romanian Prime Minister, Florin Cîțu, however announced that the date for Romanian ERM II membership had been delayed to 2024, and the adoption of the euro would be delayed again to 2027 or 2028. Then, in December 2021, Florin Georgescu, the first deputy governor of the National Bank of Romania (BNR), said that the date would be once again delayed to 2029.

In March 2023, the government maintained the target for euro adoption to be 2029, while the target to enter the antechamber of the eurozone (ERM-II) was set to 2026.

The Romanian Fiscal Council, represented by its president Daniel Dăianu, handed over a fiscal advice and analysis to the Romanian government in August 2023, concluding that the ongoing troubles to limit the excessive budget deficit had delayed the earliest year of ERM II membership to 2026–2027 and euro adoption to 2029–2030. The current national plan for adoption of the euro established a self-imposed criterion for Romania to reduce its structural budget deficit to 1% of GDP before entering ERM II. After reaching a historic high at 7.4% of GDP in 2020, the structural budget deficit was forecast to continue exceeding this ERM II criterion at a projected 5.7% of GDP in 2023 and 4.8% of GDP in 2024.

In February 2024, Finance Minister Marcel Boloș stated that even with the new more lenient EU fiscal rules entering into force starting from fiscal year 2025, which he expected would extend the adjustment period for Romania and move the required exit of its ongoing Excessive Deficit Procedure (EDP) from 2024 to 2027, the implementation of some significant annual budget cuts amounting to 0.5% of GDP each year would still be required. Romania was at first granted four years to correct its excessive deficit when the procedure was opened in 2020, but the Finance Minister assessed that Romania would likely now need a full maximum seven years to adjust, and admitted that "as long as we don’t enter on a clear fiscal consolidation path, euro-entry remains just a longer-term objective."

The latest mid-term fiscal plan of the Romanian government targets a budget deficit of 5.0% of GDP in 2024, and will only reduce it to below the EDP-required limit of 3% of GDP in 2027. Moody's projected a budget deficit of 5.7% of GDP in 2024, and assessed that "the European Commission will likely conclude this spring that Romania has failed to meet its fiscal targets under the Excessive Deficit Procedure, but Moody's expects that the government will not announce any additional consolidation efforts until after the parliamentary elections in the second half of 2024." In May 2024, the budget deficit was recorded to 6.6% of GDP in 2023, and projected by the Commission to reach 6.9% of GDP in 2024.

Despite having declared itself to be bound by the most strict fiscal provisions of the European Fiscal Compact, Romania, as a non-eurozone member state, will not be subject to the standard fine of 0.2% of GDP for having failed to meet its fiscal targets under the EDP (a deficit at maximum 4.4% of GDP in 2023 and 2.9% of GDP in 2024). However, the European Commission has previously warned Romania that failure to meet the fiscal targets of its EDP could result in the partial cancellation of ongoing payments (grants and loans) from its National Recovery and Resilience Plan for 2021-2026, of which €9 billion out of €28.5 billion had been paid as of March 2024.

In February 2026, Romanian president Nicușor Dan reaffirmed the goal of joining the eurozone and stated that Romania could meet the criteria for adopting the euro in the next 3 to 4 years. In July 2026, Dan announced a political agreement between the main centrist political parties to elaborate jointly with the National Bank of Romania a roadmap for joining the eurozone.

On 1 August 2026, Romanian President Nicușor Dan announced a political agreement on the continuation of Romania's accession to the eurozone. In a statement made after the country's rating was reconfirmed by Fitch Ratings, he stated that the future Government, together with the National Bank of Romania (BNR), will develop a roadmap for the coming years, setting out the necessary actions for adopting the euro. The statement was made in the context of presenting economic priorities and reaffirming political consensus on Romania's main strategic objectives, including the implementation of the National Recovery and Resilience Plan (NRRP) and continuing fiscal consolidation.

On 17 August 2026, Dragoș Pîslaru, the Minister of Investments and European Projects, explicitly said that 2032 could be an important target for Romania's entry into the eurozone.

In the late September 2026, Alexandru Nazare, the Minister of Finance announced that Romania aims to join the eurozone by 2035. To achieve this country must exit the excessive deficit procedure by 2030.