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December 9, 2022

EC releases the 2020 Convergence Report: Romania does not meet any of 4 economic criteria necessary for adoption of euro

Romania does not currently meet any of the four economic criteria necessary for the adoption of the euro, namely those related to price stability, sound public finances, exchange rate stability and long-term interest rate convergence, shows the 2020 convergence report published on Wednesday by the European Commission (EC).

Romanian legislation is not fully compatible with the treaty, according to the report which includes its assessment of the progress made by non-euro area Member States towards adopting the European currency.

The report covers the seven non-euro area Member States that have made a legal commitment to adopt the euro: Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania and Sweden.

Convergence reports must be drawn up every two years, regardless of possible accessions to the euro area in progress.

Joining the euro area is an open process, based on certain rules. The report is based on the convergence criteria, sometimes referred to as the “Maastricht criteria”, which are set out in Article 140 (1) of the Treaty on the Functioning of the European Union (TFEU). These convergence criteria include price stability, sound public finances, exchange rate stability and the convergence of long-term interest rates. The compatibility of national legislation with the rules of economic and monetary union is also being analyzed.

According to the report, Croatia and Sweden meet the criterion on price stability, Bulgaria, the Czech Republic, Croatia, Hungary, Poland and Sweden meet the criterion on public finances, Bulgaria, the Czech Republic, Croatia, Hungary, Poland and Sweden meet the one concerning the long-term interest rate .

None of these Member States meets the criterion on exchange rate stability, as none is a member of the Exchange Rate Mechanism (ERM II): it takes at least two years to participate in the mechanism, without serious tensions, before joining the euro area. Thus, Croatia and Sweden fulfill all the economic convergence criteria, but do not meet the exchange rate criterion for the reason stated above, shows the report as quoted by Agerpres.

“Obviously, there are five criteria that we must respect in order to join the eurozone. All these criteria are criteria that regard the health of the Romanian economy. I will give an example on the inflation, there is a reduction of inflation that you will note from the data of the National Institute for Statistics. Furthermore, in what regards the exchange rate, it can be seen that, even though we’re going through an economic crisis, there is relative stability, if not even stability of the exchange rate, the RON/EUR rate. In addition, in what regards the other indicators that we need to observe, we will go forth and follow reaching the objectives necessary so that Romania fulfills the accession criteria for the Eurozone,” said Prime Minister  Ludovic Orban.

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