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Assessing The Limits Of Eu Transfers: Why Eu Funds Don’T Fix Romania’S Budget Deficit

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  • POPESCU ADRIAN-CONSTANTIN

    (BUCHAREST UNIVERSITY OF ECONOMIC STUDIES, ROMANIA)

Abstract

This paper investigates the relationship between European Union (EU) funds and Romania’s general government budget deficit over the period 2009–2023. Using annual budget execution data and macroeconomic indicators such as real GDP growth and inflation, we employ a series of linear regression models to explore whether EU funding inflows have a measurable impact on fiscal balance. While initial results indicated a marginal association when controlling only for COVID-19 crisis years, the inclusion of GDP growth and inflation in the final model reduced the statistical significance of EU funds. The findings suggest that Romania’s budget deficit is more closely associated with domestic economic performance—particularly real GDP growth—and with exogenous shocks such as the 2020 pandemic, rather than with the direct volume of EU financial inflows. The results imply that EU funds, although substantial in scale, cannot be used as a justification for fiscal imbalances. Policy implications stress the need for better integration of EU support into long-term fiscal strategy rather than treating it as an automatic stabilizer.

Suggested Citation

  • Popescu Adrian-Constantin, 2025. "Assessing The Limits Of Eu Transfers: Why Eu Funds Don’T Fix Romania’S Budget Deficit," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 3, pages 188-196, June.
    • Handle: RePEc:cbu:jrnlec:y:2025:v:3:p:188-196
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    References listed on IDEAS

    as
    1. Laura Marcu & Tomislav Kandzija & Jelena Dorotic, 2020. "EU Funds Absorption: Case of Romania," Postmodern Openings, Editura Lumen, Department of Economics, vol. 11(4), pages 41-63, December.
    2. Ionel Bostan & Andrei-Alexandru Moroşan & Cristian-Valentin Hapenciuc & Pavel Stanciu & Iulian Condratov, 2022. "Are Structural Funds a Real Solution for Regional Development in the European Union? A Study on the Northeast Region of Romania," JRFM, MDPI, vol. 15(6), pages 1-18, May.
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