00:07Joining me is Romania's Finance Minister Aleksandru Nazare. He has just unveiled a new economic
00:14recovery package for Romania aimed at boosting investments in the country and is also leading
00:20efforts to bring down the budget deficit. We're here in Brussels today where Minister Nazare has
00:26met with EU finance ministers for talks. Minister, welcome. Thank you for joining us. Thank you and
00:30thank you for the invitation. Let me start with the domestic situation in Romania because new data
00:36suggests that the country is now in a technical recession but you've said that we need to be
00:42optimistic, that you have measures that will turn things around. Tell us more about this economic
00:48recovery package that you hope will boost investments in the country. First and foremost I would say that
00:54conditions related to Romania also the relation with the European Commission and the way Romania
01:00is perceived in the Council is much better now. It's significantly improved compared to what it was
01:07six months ago. So six months ago there were all sorts of discussions regarding the rating agencies
01:13about Romania's rating, about the RRF, the renegotiation, the renegotiation of the RRF,
01:21the possibility of not meeting the deficit target that we had for last year and all these things are
01:30gone. We've met the deficit target for 2025 but we overperformed with 0.7 percent. We succeeded to
01:39reduce the deficit from 0.6 in cash terms to 7.6 in cash terms. The primary deficit which is
01:46even more
01:47important was reduced 1.5 percent and most likely the ESA deficit will also have around one percent
01:57adjustment. So all these things performed in six months along with our consolidation packages which
02:06were more than three percent of GDP ensure that we are much more closer to our trajectory than before.
02:14Yes, your country still has one of the highest deficits in the bloc. It's under the excessive
02:21deficit procedure. The Commission is urging you to take further action and it is also affecting
02:27borrowing costs. When it comes to that interest rate on government's debt, is that something that
02:36you're prioritising because it remains very, very high and it's impacting, I would imagine,
02:40your country's capacity to really move on and make progress.
02:44This was one of our primary targets because in order to accelerate the economic recovery, in order to
02:51support growth, we need to bring the interest rates down. And if you look, there is a very big difference
02:58from what it was in May last year. So for the maturity of 10 years, for the RON, not for
03:05the Euro,
03:06the interest rates went from 8.5 to around 6.5. So it's almost two percent reduction of interest rates
03:16in around six months. This will help Romanian economy in 2026 because it will help the crediting in
03:26general. It will bring more money into the economy and will allow more investments in Romania.
03:31You seem to have a very optimistic tone, but I do believe that Fitch has kind of raised issues and
03:36there are doubts around the credit rating. Is that something that concerns you?
03:40I think the discussion with Fitch that we had in January and February is much better than the
03:47discussion we had in August last year. It's a completely new tone, completely new way of addressing
03:55the issues. Fitch recognizes the progress that Romania has and of course underlines future risk.
04:01I know, Minister, that you've been part of talks around the economy in Romania and the wider EU for
04:06many years. You've been part of a minister's gathering here many times before. What is the
04:13trajectory for Romania in terms of joining the euro? Because we know that several other finance
04:19ministers, such as the Polish counterpart of yours, is saying we're not interested in joining the euro.
04:23We have our own currency. What are Romania's aspirations?
04:27First of all, we need to raise the ambition towards how we treat economy in general. Our ambition
04:34regarding where we want to see Romanian economy needs to change. And this is part of what we're doing.
04:43And in order to do this, of course, we need to exit the excessive deficit procedure.
04:50We spent too much time the last five years in the excessive deficit procedure. And now with the
04:58measures that we've taken, we come back in the trajectory. We return to where we were supposed
05:04to be in order to be able 2029, 2030 to exit the procedure. And for the euro is the same
05:11discussion.
05:12We cannot discuss euro before we do this, before we get out of the procedure. So this is a prerequisite.
05:20And this is a very important project for Romania, that fiscal discipline comes back, measures to
05:28support the economy and to support growth in a very intelligent way, aligned with what Draghi and
05:35Letta are projecting for the entire euro. And this is what we put in our recovery, economic recovery plan,
05:42in our economic recovery program that we still recently presented. So we basically have a completely
05:50modernized menu for attracting FDI in Romania. It's a very coherent menu that Romania didn't have until now.
05:59We will have an instrument for investments over 200 million in Romania, which will be very flexible,
06:07with grants, with tax credits, with different ways of, let's say, avoiding bureaucracy, ensuring that the
06:18lands are given by local administrations for bigger investors, ensuring ways in which the investor should
06:24be treated differently. You mentioned Draghi and Letta and I'd like to take a look at the European situation,
06:31because we know now that by the summer, by June, the EU wants to introduce specific measures in order to
06:37regain its competitive edge. Some of the ideas on the table include euro bonds, so more joint borrowing at
06:46the EU level in order to fund strategic investments. Is this something Romania supports?
06:50We've done it with the next generation. We've done it again with SAFE. I think if this is aligned with
06:59our
06:59strategic priorities, and definitely it somehow responds to the investment European economy needs in
07:09certain strategic fields like AI, for instance, or all these areas in which Europe needs investment. If these
07:19things are aligned, yes, I think it's a very good idea. And what about the other concept that's being
07:24floated mainly by the French for prioritizing made in Europe, giving a European preference in public
07:31tender contracts and so on? Is this something that you also think it's a good idea? It supports the
07:37strategic autonomy that we're discussing. I mean, this should be a European project, and this is the core of
07:43the project. I mean, imagine that ever since the European Union was created, this was the entire idea
07:53behind. That should be one powerful bloc, a pan-European bloc.
07:58But even if that would mean limiting the amount of, let's say, American products that can be bought. I know
08:05that Romania has a very strong economic relationship with the US, but the world order is changing swiftly.
08:12Is that going to impact, do you think, Romania's relationship with the US and Europe's relationship
08:17with the US? I think the more we create an investment-friendly environment in Europe, the better.
08:25Now we have 300 billion of our savings invested abroad. If we make the best that these billions
08:35invested abroad are invested in Europe, it's very good for Europe. So we don't necessarily have to look
08:41at the competitiveness. We have to look on how to better use the savings that we already have
08:48as European Union. There's also talk, however, of this two-speed Europe. So a Europe where a group of
08:55maybe powerful economies move ahead on their own and leave others behind, for example, to implement a
09:01capital markets union, which is something you've just mentioned. Do you fear that risks leaving
09:06countries like Romania left behind? Romania supports the capital markets package. Romania supports the
09:14savings and investments union. The entire discussion in ECOFIN, we said it in the Council. In these six
09:25months, I always said it. I always said we need to accelerate this package.
09:31If this format is accelerating some of the files that we already have in ECOFIN, I think that's a good
09:37idea.
09:38But of course, this is very important to, let's say, dynamize the ECOFIN a little bit on some specific topics.
09:48We will find out more about what is the, let's say, agenda criteria for what the group will do.
10:00But yet we don't know. It's just one meeting. It was just the letter announced. So it's so early to
10:07comment on what will happen.
10:08There is this E6 formation that's already been established, it seems, with these six heavyweights.
10:13Do you think it's positive whether they will pull Europe in the right direction or is it creating divisions?
10:18I think we should see what eventually will happen out of the E6. I'm in very close touch with the
10:26German minister we met today. I'm in also very close touch with the French minister on all of the files.
10:33I don't think they plan to leave anybody behind. I think they plan to solve some of the critical issues
10:39that are on the table. And if they succeed, it's a very good thing for Europe.
10:43Finally, to close minister, one of the big areas of opportunity in terms of investment is obviously
10:50defence spending. Romania is a country on Europe's eastern flank. It has experienced drone incursions
10:58and so on very recently. And how important is this scaled up investment in the defence industry for
11:05your country? I think it's very important. We want our national defence industry. We want to support the
11:12national defence industry. That's why we created also a special scheme for this of 200 million euros.
11:18Of course, SAFE is much bigger. We negotiate. I was very much involved in the negotiation of SAFE. It
11:24happened in the Ministry of Finance and we managed to secure the second biggest allocation, 16.2 billion.
11:32Part of SAFE is also infrastructure for dual use. There are very important pieces of highways which
11:38will be built with SAFE money in Moldova around the Ash. Those are critical pieces of infrastructure. So
11:47SAFE is very important and I think it's a very good project for Europe. Minister, thank you so much for
11:52joining us today. Thank you for the invitation.
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