ASSESSING THE LIMITS OF EU TRANSFERS: WHY EU FUNDS DON’T FIX ROMANIA’S BUDGET DEFICIT

Popescu Adrian-Constantin
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Popescu Adrian-Constantin: BUCHAREST UNIVERSITY OF ECONOMIC STUDIES, ROMANIA

Annals - Economy Series, 2025, vol. 3, 188-196

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.

Keywords: European Union Funds; Budget Deficit; Fiscal Policy; Economic Growth; Regression Analysis; Public Finance (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:cbu:jrnlec:y:2025:v:3:p:188-196

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