Romania’s pay deadlock risks €770m

Ilie Bolojan did what interim prime ministers rarely get to do cleanly: he put a figure on the bill left by others. Romania has lost €770 million because its politicians could not agree on a public-sector wage law, he said on 31 August, and may lose up to €100 million more because coal plants due for closure are still running (HotNews). His interim government, he added, was not responsible for either failure.

The date was not incidental. 31 August was the final day for Romania to complete reforms promised under its PNRR, the national recovery plan agreed with Brussels after Covid. The EU’s Recovery and Resilience Facility gave member states grants and loans in return for measurable reforms and investments, with payment linked to proof rather than political intent (Commission closure guidance). Romania is now in the uncomfortable part of that bargain: the European Commission checks what was actually delivered and decides what to withhold.

Three losses, three levels of certainty

The figures need separating, because they are being spoken about as if they carry the same legal weight. They do not.

The firmest loss is €458.7 million, already cut from Romania’s third payment request earlier this year after milestones were missed and a suspension period ran out (Agerpres, Radio Romania International). That money is gone.

The €770 million is different. It is a political admission ahead of a formal Commission decision. President Nicușor Dan said the four former coalition parties had failed to agree on a unified pay law and had accepted the loss (Agerpres, Spotmedia). Euronews and Bloomberg reported it as money expected to be lost, not yet formally booked. By the time the deadline passed, the Commission had not published its payment decision.

The coal figure is softer again. Bolojan said Romania could lose up to €100 million because lignite plants at Turceni and Craiova were not shut as promised (Digi24). That is Bucharest’s estimate of a penalty the Commission has yet to set.

The coal file is about more than money

The wage law is a familiar political failure: parties could not agree on who should be paid what by the state. UDMR leader Kelemen Hunor argued that a bad law should not be passed simply to secure EU money (Kronika). That may be convenient politics, but it is at least a recognisable argument.

The coal file is a harder case because it is about sequencing. Romania promised to close plants before replacement generation and district heating were ready. Bolojan’s own account was that alternatives around Craiova and the Jiu Valley were not yet in place (HotNews). Closing coal without replacement heat and power would move the cost from the state’s EU account onto local households and municipal heating systems.

That is the part Brussels accounting cannot quite capture. The Commission can attach a price to a missed milestone. But if a plant is closed before the replacement exists, the penalty is paid first by the people living beside it.

Parliament has now written that tension into law. A PSD amendment makes coal closures conditional on equivalent replacement capacity being built first. The Commission warned that the change could weaken the decarbonisation milestone already approved in Romania’s plan (Agerpres, Romania Insider). A Romanian government put an ambitious closure timetable into an EU-backed plan. Later governments are now discovering that a deadline on paper does not build the infrastructure beneath it.

Romania is not an outlier so much as an early warning. The closing phase of the RRF is exposing promises across the EU that were easier to sign than to implement. Article 24 of the RRF regulation gives the Commission the lever: it can make partial payments, suspend money linked to unmet conditions, and eventually reduce a country’s allocation if the evidence never arrives (EUR-Lex, Council explainer). Reform commitments have become enforceable checklists.

Who pays when grants disappear

When EU grants fail to arrive, governments still have to choose. They can borrow to replace the money, or delay the projects the money was meant to fund. An analysis of Romanian finance-ministry data found that more than 70% of public investment in the first half of 2026 came from EU grants and PNRR loans (Friendship Bridge). Fitch rates Romania at BBB- with a negative outlook (Fitch Ratings). For a borrower sitting one notch above junk, replacement funding is not free.

The RRF has done what it was built to do: turn reform promises into fiscal consequences. The Commission can put a price on every missed milestone. Romanian governments still owe voters a plainer answer on why coal closures were promised before the replacements were ready.