title: Council Recommendation of 20 July 2020 on the 2020 National Reform Programme of Portugal and delivering a Council opinion on the 2020 Stability Programme of Portugal 2020/C 282/22

text:
               26.8.2020

               EN

               Official Journal of the European Union

               C 282/142

      COUNCIL RECOMMENDATION
      of 20 July 2020
      on the 2020 National Reform Programme of Portugal and delivering a Council opinion on the 2020 Stability Programme of Portugal
      (2020/C 282/22)
      THE COUNCIL OF THE EUROPEAN UNION,
      Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 121(2) and 148(4) thereof,
      Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(2) thereof,
      Having regard to Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances (2), and in particular Article 6(1) thereof,
      Having regard to the recommendation of the European Commission,
      Having regard to the resolutions of the European Parliament,
      Having regard to the conclusions of the European Council,
      Having regard to the opinion of the Employment Committee,
      Having regard to the opinion of the Economic and Financial Committee,
      Having regard to the opinion of the Social Protection Committee,
      Having regard to the opinion of the Economic Policy Committee,
      Whereas:

                  (1)

                  On 17 December 2019, the Commission adopted the Annual Sustainable Growth Strategy, marking the start of the 2020 European Semester for economic policy coordination. It took due account of the European Pillar of Social Rights, proclaimed by the European Parliament, the Council and the Commission on 17 November 2017. On 17 December 2019, on the basis of Regulation (EU) No 1176/2011, the Commission also adopted the Alert Mechanism Report, in which it identified Portugal as one of the Member States for which an in-depth review would be carried out. On the same date, the Commission also adopted a recommendation for a Council recommendation on the economic policy of the euro area.

                  (2)

                  The 2020 country report for Portugal was published on 26 February 2020. It assessed Portugal’s progress in addressing the country-specific recommendations adopted by the Council on 9 July 2019 (3) (‘the 2019 country-specific recommendations’), the follow-up given to the country-specific recommendations adopted in previous years and Portugal’s progress towards its national Europe 2020 targets. It also included an in-depth review under Article 5 of Regulation (EU) No 1176/2011, the results of which were also published on 26 February 2020. The Commission’s analysis led it to conclude that Portugal is experiencing macroeconomic imbalances. In particular, the large stocks of net external liabilities, private and public debt, and a high share of non-performing loans (NPLs) constitute vulnerabilities in a context of low productivity growth.

                  (3)

                  On 11 March 2020, the World Health Organization officially declared the COVID-19 outbreak a global pandemic. It is a severe public health emergency for citizens, societies and economies. It is putting national health systems under severe strain, disrupting global supply chains, causing volatility in financial markets, triggering consumer demand shocks and having negative effects across various sectors. It is threatening people’s jobs and incomes as well as companies’ business. It has delivered a major economic shock that is already having serious repercussions in the Union. On 13 March 2020, the Commission adopted a communication calling for a coordinated economic response to the crisis, involving all actors at national and Union level.

                  (4)

                  Several Member States have declared a state of emergency or introduced emergency measures. Any emergency measures should be strictly proportionate, necessary, limited in time, and in line with European and international standards. They should be subject to democratic oversight and independent judicial review.

                  (5)

                  On 20 March 2020, the Commission adopted a communication on the activation of the general escape clause of the Stability and Growth Pact. The general escape clause, as set out in Articles 5(1), 6(3), 9(1) and 10(3) of Regulation (EC) No 1466/97 and Articles 3(5) and 5(2) of Council Regulation (EC) No 1467/97 (4), facilitates the coordination of budgetary policies in times of severe economic downturn. In its communication of 20 March 2020, the Commission considered that, given the expected severe economic downturn resulting from the COVID-19 pandemic, the conditions for the activation of the general escape clause had been met and asked the Council to endorse this conclusion. On 23 March 2020, the ministers of finance of the Member States agreed with the assessment of the Commission. They agreed that the severe economic downturn requires a resolute, ambitious and coordinated response. The activation of the general escape clause allows for a temporary departure from the adjustment path towards the medium-term budgetary objective, provided that this does not endanger fiscal sustainability in the medium term. For the corrective arm, the Council may also decide, on a recommendation from the Commission, to adopt a revised fiscal trajectory. The general escape clause does not suspend the procedures of the Stability and Growth Pact. It allows Member States to depart from the budgetary requirements that would normally apply while enabling the Commission and the Council to undertake the necessary policy coordination measures within the framework of the Pact.

                  (6)

                  Continued action is required to limit and control the spread of the COVID-19 pandemic, strengthen the resilience of the national health systems, mitigate the socioeconomic consequences of the pandemic through supportive measures for business and households, and ensure adequate health and safety conditions at the workplace with a view to resuming economic activity. The Union should fully use the various tools at its disposal to support Member States’ efforts in those areas. In parallel, Member States and the Union should work together to prepare the measures necessary to bring about a return to the normal functioning of our societies and economies and to sustainable growth, integrating, inter alia, the green transition and the digital transformation, and drawing lessons from the crisis.

                  (7)

                  The COVID-19 crisis has highlighted the flexibility that the internal market offers to adapt to extraordinary situations. However, in order to ensure a swift and smooth transition to the recovery phase and the free movement of goods, services and workers, exceptional measures that prevent the internal market from functioning normally should be removed as soon as they are no longer indispensable. The current crisis has shown the need for crisis preparedness plans in the health sector. Improved purchasing strategies, diversified supply chains and strategic reserves of essential supplies are among the key elements for developing broader crisis preparedness plans.

                  (8)

                  The Union legislator has already amended the relevant legislative frameworks by means of Regulations (EU) 2020/460 (5) and (EU) 2020/558 (6) of the European Parliament and of the Council to allow Member States to mobilise all unused resources from the European Structural and Investment Funds so they can address the exceptional effects of the COVID-19 pandemic. Those amendments will provide additional flexibility, as well as simplified and streamlined procedures. To alleviate cash-flow pressures, Member States can also benefit from a 100 % co-financing rate from the Union budget in the 2020-2021 accounting year. Portugal is encouraged to make full use of those possibilities to help the individuals and sectors most affected.

                  (9)

                  The socioeconomic consequences of the COVID-19 pandemic are likely to be unevenly distributed across Portuguese regions due to different specialisation patterns, in particular in regions markedly relying on tourism, such as the Algarve and the outermost regions of Madeira and the Azores. This entails a substantial risk of widening regional and territorial disparities within Portugal. Combined with the risk of a temporary unravelling of the convergence process between Member States, the current situation calls for targeted policy responses.

                  (10)

                  On 16 May 2020, Portugal submitted its 2020 National Reform Programme and its 2020 Stability Programme. In order to take account of their interlinkages, the two programmes have been assessed at the same time.

                  (11)

                  Portugal is currently in the preventive arm of the Stability and Growth Pact and subject to the debt rule. On 13 July 2018, the Council recommended Portugal to ensure that the nominal growth rate of net primary government expenditure (7) would not exceed 0,7 % in 2019, corresponding to an annual structural adjustment of 0,6 % of gross domestic product (GDP). The Commission’s overall assessment confirms a significant deviation from the recommended adjustment path towards the medium-term budgetary objective in 2019, and over 2018 and 2019 taken together. However, in light of the activation of the general escape clause, further steps under the significant deviation procedure for Portugal are not warranted.

                  (12)

                  In its 2020 Stability Programme, the government did not include a macroeconomic scenario and plans for the general government balance and debt-to-GDP ratio for at least 2020. The 2020 Stability Programme estimates, however, that every 30 working days – i.e. around 1,5 full months – of confinement may, on average, trigger a negative impact on annual GDP of 6,5 percentage points. The macroeconomic and fiscal outlook is affected by high uncertainty because of the COVID-19 pandemic. There are risks underlying the budgetary projections, linked to the surge in public contingent liabilities stemming from some public corporations and the COVID-19-related measures targeting the private sector. This is on top of previously contracted contingent liabilities.

                  (13)

                  In response to the COVID-19 pandemic, and as part of a coordinated Union approach, Portugal has adopted timely budgetary measures to increase the capacity of its health system, contain the pandemic, and provide relief to those individuals and sectors that have been particularly affected. The 2020 Stability Programme reports estimates for the budgetary impacts of those measures on either a monthly or an annual basis, without providing a projected annual aggregate figure for 2020. The measures include, among others, one-time special support for firms for the resumption of business activity (EUR 508,0 million or 0,3 % of GDP), a simplified scheme for the temporary interruption of work or reduction of normal working time (‘lay-off’, EUR 373,3 million or 0,2 % of GDP per month of application), and the purchase of personal protective equipment by the health system (0,1 % of GDP per month of application). (8) The Commission estimates that an overall direct budgetary cost of around 2,5 % of GDP may result from those measures in 2020. In addition, Portugal has announced measures that, while not having as a rule a direct budgetary impact, will contribute to providing liquidity support to businesses and households, which the 2020 Stability Programme estimates at close to EUR 25,1 billion or 12,5 % of GDP. Those measures include tax deferrals for value-added, personal and corporate income taxes, as well as social contributions (EUR 7,9 billion or 3,9 % of GDP) and State guaranteed credit lines and other similar initiatives (EUR 4,0 billion or 2,0 % of GDP). Overall, the measures taken by Portugal are in line with the guidelines set out in the Commission communication of 13 March 2020. The full implementation of the emergency measures and of supportive fiscal measures, followed by a refocusing of fiscal policies towards achieving prudent medium-term fiscal positions when economic conditions allow, will contribute to preserving fiscal sustainability in the medium term.

                  (14)

                  Based on the Commission 2020 spring forecast under unchanged policies, Portugal’s general government deficit is forecast at 6,5 % of GDP in 2020 and 1,8 % of GDP in 2021. The general government debt-to-GDP ratio is projected to peak at 131,6 % in 2020, before decreasing to 124,4 % in 2021.

                  (15)

                  On 20 May 2020, the Commission issued a report prepared in accordance with Article 126(3) of the Treaty for Portugal because of the projected breach of the 3 %-of-GDP deficit threshold in 2020. Overall, the Commission’s analysis suggests that the deficit criterion as defined in the Treaty and in Regulation (EC) No 1467/97 has not been fulfilled.

                  (16)

                  The COVID-19 pandemic hit Portugal in early March 2020, putting its health system under great pressure. The government swiftly implemented a broad range of strict containment measures, having enacted a constitutional state of emergency between 18 March 2020 and 2 May 2020 to limit as much as possible the spread of the disease and the loss of lives. Portugal took measures to strengthen the response capacity of the health system and to flatten the curve of infections, so as not to overwhelm hospitals. The national and global containment measures have severely curtailed economic activity in most sectors, hitting tourism and related activities particularly hard, and clouded the social and economic outlook in Portugal, particularly its microenterprises and small and medium-sized enterprises (SMEs). The economy is projected to contract by 6,8 % in 2020 and to rebound by 5,8 % in 2021.

                  (17)

                  To mitigate the immediate impact of the COVID-19 pandemic on people’s health, high expenditure for the health system is being incurred on a broad front. Investments are needed to improve the resilience of the health system, securing equipment, products and infrastructure necessary to bolster crisis-response capacities, including intensive care, testing, technological and applied medical research, and universal access, including outside urban areas and in the outermost regions of Madeira and the Azores. At the outset of the COVID-19 outbreak, a plan to introduce a new governance model for public hospitals was gradually under way, with substantial increases in annual budgets. Its steady implementation in the current juncture could help to strengthen the resilience of the health system. COVID-19 has demonstrated the fragility of long-term care facilities in Portugal, which have seen higher rates of infection. Despite improvements in the territorial coverage of long-term care in the last decade, overall access rates are low in all regions of the country. At the same time, already before the COVID-19 outbreak, healthcare expenditure was forecast to increase significantly as a percentage share of GDP over the long term. Continued efforts to improve efficiency and capacity of health and long-term care are necessary to deal with the current crisis as well as to address ageing-related challenges.

                  (18)

                  Following sustained positive labour-market developments since 2014, Portugal will now face extraordinary employment challenges as a result of the pandemic. According to the Commission forecast, unemployment is expected to rise to 9,7 % of the active population in 2020 before decreasing to 7,4 % in 2021, up from 6,5 % in 2019. To support employment and mitigate the risk of job losses, Portugal has simplified and adapted the use of its existing scheme for the temporary interruption of work or reduction of normal working time. Targeted use of Union’s and national programmes could preserve jobs and economic activity, especially in relation to SMEs. In the recovery phase, personalised and targeted active labour-market policies, in particular upskilling and reskilling, will play a decisive role in keeping the workforce job-ready. Cooperation among employers, education and training institutions, and public employment services will be crucial in generating a recruitment surge.

                  (19)

                  The COVID-19 pandemic requires measures to mitigate social impacts and protect people in vulnerable situations, so that inequalities are not exacerbated. These include unemployment benefit schemes and income support for the most affected workers, including self-employed and nonstandard workers, access to services and measures fostering reintegration in the labour market. The implementation of a national social contingency plan in cooperation with social partners and civil society could contribute to an immediate and coordinated response to mitigate the social consequences of the crisis. Policy changes to reverse the decline in the effectiveness of social transfers in recent years, e.g. increases in the minimum income, the solidarity supplement for the elderly, pensions and family benefits have had a positive effect on income distribution. Nevertheless, social transfers (excluding pensions) reduced the proportion of population at risk of poverty by only 23,8 % in Portugal in 2018, significantly below the Union average of 34 %. In addition, the adequacy of the minimum income scheme is among the lowest in the Union, providing incomes of only 40 % of the national poverty threshold.

                  (20)

                  The COVID-19 pandemic places significant demands on the use of digital technologies to ensure continued access to education, training and business activity, against the background of the necessary adoption of social distancing measures. Portuguese schools and training centres have closed and traditional in-person learning has been disrupted and replaced by an offer for distance learning. Around 6 % of households still have no access to the internet, affecting an estimated 50 000 pupils, and internet access and telecommunications network coverage vary widely between urban and rural areas. Students from socioeconomically advantaged families are better placed to manage the challenges posed by distance learning. In addition, Portugal has a large digital skills deficit. In 2019, 48 % of the population lacked basic digital skills, including about 26 % with no digital skills at all and the proportion of those having never used the internet is twice the Union average. Current circumstances call for intensive implementation of e-training courses and efforts to help people suffering from digital exclusion to overcome the obstacles in accessing distance learning. The adoption of digital technologies by businesses to offer alternative working arrangements and digital services would allow business continuity to firms whose services can be provided online, thereby mitigating the impact of the restrictions in some sectors. This is particularly relevant in Portugal whose economy is mostly characterised by microenterprises concentrated in traditional sectors. One of the main factors hindering the digitalisation of SMEs is the digital knowledge gap, which is a result of low overall levels of digital literacy among managers and employees.

                  (21)

                  To prevent avoidable bankruptcies and allow firms to survive the shock and remain competitive, Portugal adopted a set of measures aimed at supporting viable firms, and in particular SMEs, which have been affected by the imposition of the social distancing measures, implying restrictions to operations and a drop in domestic and global demand. These measures focus on provision of the liquidity support, including through guarantees funded by the State and public financial institutions, direct subsidies, tax deferrals, social contributions reductions and deferrals, as well as housing rents deferrals and a public moratorium on bank loans to households and firms. They focus in particular on the hardest-hit sectors, including tourism, hospitality and related economic activities, as well as manufacturing and exporting companies. It is important that such measures be implemented by the public institutions and private intermediaries in a timely and efficient manner. In this context, the Portuguese government streamlined the process for accessing credit lines, specifically the documentation to be presented by firms. In the process of designing and implementing these measures, the resilience of the banking sector, along with the funding conditions of the economy, needs to be taken into account. Additional policy action aims at supporting entrepreneurship and the self-employed.

                  (22)

                  To foster the economic recovery, it will be important to front-load mature public investment projects and promote private investment, including through relevant reforms. Growth-enhancing investments to support research and innovation, digitalisation, connectivity and green transition will contribute to the recovery of the Portuguese economy and redirect it towards long-term sustainable growth. Investments in transport infrastructure could address the peripheral situation of Portugal, in particular by closing railway connection gaps with Spain and by allowing the exploitation of the underused potential of Portuguese ports. Portugal’s National Energy and Climate Plan reports important investment needs to tackle the climate and energy transition. There is still a wide margin to improve energy efficiency in buildings and reduce energy consumption in business. Better energy connectivity within the Iberian Peninsula could enable more competition and facilitate the deployment of renewable energy. Investment can also help with regard to anticipating the adverse effects of climate change, such as floods and forest fires, as well as improving water and waste management and developing the potential of the circular economy. The programming of the Just Transition Fund, which is the subject of a Commission proposal, for the period 2021-2027 could help Portugal to address some of the challenges posed by the transition to a climate-neutral economy, in particular in the territories covered by Annex D to the 2020 country report. This would allow Portugal to make the best use of that Fund.

                  (23)

                  The Portuguese justice system has become more efficient in recent years, thanks to a number of measures that continue to be implemented. However, the pandemic and resulting recession may lead to an increase in litigation that could exacerbate remaining bottlenecks, in particular the lengthy proceedings and high case backlogs in administrative and tax courts. Increased efficiency and resilience of the justice system could improve business environment, particularly benefiting domestic SMEs and investors.

                  (24)

                  While the country-specific recommendations set out in this Recommendation (‘the 2020 country-specific recommendations’) focus on tackling the socioeconomic impacts of the pandemic and facilitating the economic recovery, the 2019 country-specific recommendations also covered reforms that are essential to address medium- to long-term structural challenges. The 2019 country-specific recommendations remain pertinent and will continue to be monitored throughout next year’s European Semester. That includes the 2019 country-specific recommendations regarding investment-related economic policies. All of the 2019 country-specific recommendations should be taken into account for the strategic programming of post-2020 cohesion policy funding, including for mitigating measures and exit strategies with regard to the current crisis.

                  (25)

                  Past years witnessed several aggregate improvements in the Portuguese banking system. Profitability metrics improved on the back of efforts to increase the sector’s efficiency and the reduction of provisions and impairments. Given the improved profitability, the banking system proceeded on its path to strengthen capital ratios. However, own-funds levels are still below the Union average. The ratio of NPLs continued its multiyear downward trend but remains double the Union ratio. Income generation capacity remains a challenge amid low interest rates and in an economy with a still high level of indebtedness. The COVID-19 crisis, the low-interest-rate environment and also a certain exposure to oil-depending countries will create challenges for the banking sector and will be reflected in the credit quality of loans granted.

                  (26)

                  Lengthy insolvency proceedings have been identified as one of the key factors preventing banks from dealing promptly with the existing stock of NPLs. They also have a substantial influence on the pricing of these assets on the secondary market, as the outcomes, measured as payments to creditors, are insufficient. The breakdown of NPLs continues to show a consistently high proportion of corporate loans (about two thirds), which are least amenable to a swift, standardised approach. In recent years, several amendments have been made to both insolvency and civil enforcement proceedings. Further adjustments, in particular targeting unjustified delay, would help for both creditors and borrowers, with the latter benefiting from a fresh start.

                  (27)

                  The European Semester provides the framework for continuous economic and employment policy coordination in the Union, which can contribute to a sustainable economy. In their 2020 National Reform Programmes, Member States have taken stock of progress made in the implementation of the United Nations Sustainable Development Goals (SDGs). By ensuring the full implementation of the 2020 country-specific recommendations, Portugal will contribute to the progress towards the SDGs and to the common effort of ensuring competitive sustainability in the Union.

                  (28)

                  Close coordination between economies in the economic and monetary union is key in achieving a swift recovery from the economic impact of the COVID-19 pandemic. As a Member State whose currency is the euro, Portugal should ensure that its policies remain consistent with the 2020 euro-area recommendations and coordinated with those of the other Member States whose currency is the euro, taking into account political guidance from the Eurogroup.

                  (29)

                  In the context of the 2020 European Semester, the Commission has carried out a comprehensive analysis of Portugal’s economic policy and published it in the 2020 country report. It has also assessed the 2020 Stability Programme, the 2020 National Reform Programme and the follow-up given to the country-specific recommendations addressed to Portugal in previous years. The Commission has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in Portugal, but also their compliance with Union rules and guidance, given the need to strengthen the Union’s overall economic governance by providing Union-level input into future national decisions.

                  (30)

                  In the light of this assessment, the Council has examined the 2020 Stability Programme and its opinion (9) is reflected in particular in recommendation (1) below.

                  (31)

                  In the light of the Commission’s in-depth review and this assessment, the Council has examined the 2020 National Reform Programme and the 2020 Stability Programme. The 2020 country-specific recommendations take into account the need to tackle the COVID-19 pandemic and facilitate the economic recovery as a necessary first step to allow for an adjustment of imbalances. The 2020 country-specific recommendations directly addressing the macroeconomic imbalances identified by the Commission under Article 6 of Regulation (EU) No 1176/2011 are reflected in recommendations (1), (2), (3) and (4),

            HEREBY RECOMMENDS that Portugal take action in 2020 and 2021 to:

                  1.

                  Take all necessary measures, in line with the general escape clause of the Stability and Growth Pact, to effectively address the COVID-19 pandemic, sustain the economy and support the ensuing recovery. When economic conditions allow, pursue fiscal policies aimed at achieving prudent medium-term fiscal positions and ensuring debt sustainability, while enhancing investment. Strengthen the resilience of the health system and ensure equal access to quality health and long-term care.

                  2.

                  Support employment and prioritise measures to preserve jobs. Guarantee sufficient and effective social protection and income support. Support the use of digital technologies to ensure equal access to quality education and training and to boost firms’ competitiveness.

                  3.

                  Implement the temporary measures aimed at securing access to liquidity for firms, in particular SMEs. Front-load mature public investment projects and promote private investment to foster the economic recovery. Focus investment on the green and digital transition, in particular on clean and efficient production and use of energy, rail infrastructure and innovation.

                  4.

                  Increase the efficiency of administrative and tax courts.

         Done at Brussels, 20 July 2020.

               For the Council

               The President

            J. KLOECKNER

         (1)  OJ L 209, 2.8.1997, p. 1.

         (2)  OJ L 306, 23.11.2011, p. 25.

         (3)  OJ C 301, 5.9.2019, p. 129.

         (4)  Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation of the excessive deficit procedure (OJ L 209, 2.8.1997, p. 6).

         (5)  Regulation (EU) 2020/460 of the European Parliament and of the Council of 30 March 2020 amending Regulations (EU) No 1301/2013, (EU) No 1303/2013 and (EU) No 508/2014 as regards specific measures to mobilise investments in the healthcare systems of Member States and in other sectors of their economies in response to the COVID-19 outbreak (Coronavirus Response Investment Initiative) (OJ L 99, 31.3.2020, p. 5).

         (6)  Regulation (EU) 2020/558 of the European Parliament and of the Council of 23 April 2020 amending Regulations (EU) No 1301/2013 and (EU) No 1303/2013 as regards specific measures to provide exceptional flexibility for the use of the European Structural and Investments Funds in response to the COVID-19 outbreak (OJ L 130, 24.4.2020, p. 1).

         (7)  Net primary government expenditure comprises total government expenditure excluding interest expenditure, expenditure on Union programmes fully matched by Union funds revenue and non-discretionary changes in unemployment benefit expenditure. Nationally financed gross fixed capital formation is smoothed over a four-year period. Discretionary revenue measures or revenue increases mandated by law are factored in. One-off measures on both the revenue and expenditure sides are netted out.

         (8)  The budgetary impacts are expressed as a percentage of GDP in 2020 according to the Commission 2020 spring forecast (EUR 200,4 billion).

         (9)  Under Article 5(2) of Regulation (EC) No 1466/97.


title: Council Recommendation of 20 July 2020 on the 2020 National Reform Programme of Romania and delivering a Council opinion on the 2020 Convergence Programme of Romania 2020/C 282/23

text:
               26.8.2020

               EN

               Official Journal of the European Union

               C 282/149

      COUNCIL RECOMMENDATION
      of 20 July 2020
      on the 2020 National Reform Programme of Romania and delivering a Council opinion on the 2020 Convergence Programme of Romania
      (2020/C 282/23)
      THE COUNCIL OF THE EUROPEAN UNION,
      Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 121(2) and 148(4) thereof,
      Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(2) thereof,
      Having regard to Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances (2), and in particular Article 6(1) thereof,
      Having regard to the recommendation of the European Commission,
      Having regard to the resolutions of the European Parliament,
      Having regard to the conclusions of the European Council,
      Having regard to the opinion of the Employment Committee,
      Having regard to the opinion of the Economic and Financial Committee,
      Having regard to the opinion of the Social Protection Committee,
      Having regard to the opinion of the Economic Policy Committee,
      Whereas:

                  (1)

                  On 17 December 2019, the Commission adopted the Annual Sustainable Growth Strategy, marking the start of the 2020 European Semester for economic policy coordination. It took due account of the European Pillar of Social Rights, proclaimed by the European Parliament, the Council and the Commission on 17 November 2017. On 17 December 2019, on the basis of Regulation (EU) No 1176/2011, the Commission also adopted the Alert Mechanism Report, in which it identified Romania as one of the Member States for which an in-depth review would be carried out.

                  (2)

                  The 2020 country report for Romania was published on 26 February 2020. It assessed Romania’s progress in addressing the country-specific recommendations adopted by the Council on 9 July 2019 (3) (‘the 2019 country-specific recommendations’), the follow-up given to the country-specific recommendations adopted in previous years and Romania’s progress towards its national Europe 2020 targets. It also included an in-depth review under Article 5 of Regulation (EU) No 1176/2011, the results of which were also published on 26 February 2020. The Commission’s analysis led it to conclude that Romania is experiencing macroeconomic imbalances. In particular, vulnerabilities are linked to cost-competitiveness and a widening current-account deficit in a context of an expansionary fiscal policy and an unpredictable business environment.

                  (3)

                  On 11 March 2020, the World Health Organization officially declared the COVID-19 outbreak a global pandemic. It is a severe public health emergency for citizens, societies and economies. It is putting national health systems under severe strain, disrupting global supply chains, causing volatility in financial markets, triggering consumer demand shocks and having negative effects across various sectors. It is threatening people’s jobs and incomes as well as companies’ business. It has delivered a major economic shock that is already having serious repercussions in the Union. On 13 March 2020, the Commission adopted a communication calling for a coordinated economic response to the crisis, involving all actors at national and Union level.

                  (4)

                  Several Member States have declared a state of emergency or introduced emergency measures. Any emergency measures should be strictly proportionate, necessary, limited in time, and in line with European and international standards. They should be subject to democratic oversight and independent judicial review.

                  (5)

                  On 20 March 2020, the Commission adopted a communication on the activation of the general escape clause of the Stability and Growth Pact. The general escape clause, as set out in Articles 5(1), 6(3), 9(1) and 10(3) of Regulation (EC) No 1466/97 and Articles 3(5) and 5(2) of Council Regulation (EC) No 1467/97 (4), facilitates the coordination of budgetary policies in times of severe economic downturn. In its communication of 20 March 2020, the Commission considered that, given the expected severe economic downturn resulting from the COVID-19 pandemic, the conditions for the activation of the general escape clause had been met and asked the Council to endorse this conclusion. On 23 March 2020, the ministers of finance of the Member States agreed with the assessment of the Commission. They agreed that the severe economic downturn requires a resolute, ambitious and coordinated response. The activation of the general escape clause allows for a temporary departure from the adjustment path towards the medium-term budgetary objective, provided that this does not endanger fiscal sustainability in the medium term. For the corrective arm, the Council may also decide, on a recommendation from the Commission, to adopt a revised fiscal trajectory. The general escape clause does not suspend the procedures of the Stability and Growth Pact. It allows Member States to depart from the budgetary requirements that would normally apply while enabling the Commission and the Council to undertake the necessary policy coordination measures within the framework of the Pact.

                  (6)

                  Continued action is required to limit and control the spread of the COVID-19 pandemic, strengthen the resilience of the national health systems, mitigate the socioeconomic consequences of the pandemic through supportive measures for business and households, and ensure adequate health and safety conditions at the workplace with a view to resuming economic activity. The Union should fully use the various tools at its disposal to support Member States’ efforts in those areas. In parallel, Member States and the Union should work together to prepare the measures necessary to bring about a return to the normal functioning of our societies and economies and to sustainable growth, integrating, inter alia, the green transition and the digital transformation, and drawing lessons from the crisis.

                  (7)

                  The COVID-19 crisis has highlighted the flexibility that the internal market offers to adapt to extraordinary situations. However, in order to ensure a swift and smooth transition to the recovery phase and the free movement of goods, services and workers, exceptional measures that prevent the internal market from functioning normally should be removed as soon as they are no longer indispensable. The current crisis has shown the need for crisis preparedness plans in the health sector. Improved purchasing strategies, diversified supply chains and strategic reserves of essential supplies are among the key elements for developing broader crisis preparedness plans.

                  (8)

                  The Union legislator has already amended the relevant legislative frameworks by means of Regulations (EU) 2020/460 (5) and (EU) 2020/558 (6) of the European Parliament and of the Council to allow Member States to mobilise all unused resources from the European Structural and Investment Funds so they can address the exceptional effects of the COVID-19 pandemic. Those amendments will provide additional flexibility, as well as simplified and streamlined procedures. To alleviate cash-flow pressures, Member States can also benefit from a 100 % co-financing rate from the Union budget in the 2020-2021 accounting year. Romania is encouraged to make full use of those possibilities to help the individuals and sectors most affected.

                  (9)

                  The socioeconomic consequences of the COVID-19 pandemic are likely to be unevenly distributed across Romanian regions because of significant investment and labour productivity gaps and different specialisation patterns. This entails a substantial risk of widening regional disparities within Romania, reversing the already observed trend of slightly reducing disparities between the capital city and the rest of the regions or between urban and rural areas. Combined with the risk of a temporary unravelling of the convergence process between Member States, the current situation calls for targeted policy responses.

                  (10)

                  Romania submitted its 2020 National Reform Programme on 8 May 2020 and its 2020 Convergence Programme on 14 May 2020. In order to take account of their interlinkages, the two programmes have been assessed at the same time.

                  (11)

                  Romania is currently in the corrective arm of the Stability and Growth Pact.

                  (12)

                  On 3 April 2020, the Council adopted Decision (EU) 2020/509 (7), finding that an excessive deficit existed in Romania due to non-compliance with the deficit criterion in 2019. The finding was based on the updated fiscal targets by the government, which reflected the budget execution data for the year to date. The 2019 general government deficit outturn of 4,3 % of gross domestic product (GDP) confirmed the breach. The breach was the result of a continuous build-up of fiscal imbalances due to an expansionary fiscal policy since 2016, in a period of strong economic growth. Systematic and repeated derogations from national fiscal rules during that period rendered those rules largely ineffective. Moreover, Romania had repeatedly failed to take effective action in response to the Council’s recommendations made to it in the context of the significant deviation procedure. On 3 April 2020, the Council also issued a Recommendation (8) with a view to bringing an end to the situation of an excessive government deficit in Romania by 2022 at the latest.

                  (13)

                  The long-term sustainability of Romania’s public finances was already at risk prior to the COVID-19 outbreak, as a result of high budget deficits and the projected significant rise in ageing costs, in particular pensions. Old-age pensions were increased by 15 % in September 2019 and, based on a pension law adopted in summer 2019, are due to increase by 40 % in September 2020 and be recalculated upward in September 2021. Pension spending would thus increase substantially over the period 2020 to 2022. Fiscal sustainability risks are further heightened by the impact of the COVID-19 pandemic on economic activity and the fiscal effort required to cushion it. Prior fiscal policy decisions have left Romania with small fiscal buffers to deal with the outcome of the COVID-19 outbreak.

                  (14)

                  In its 2020 Convergence Programme, the government headline balance is planned to deteriorate from a deficit of 4,3 % of GDP in 2019 to a deficit of 6,7 % of GDP in 2020, while the general government debt-to-GDP ratio is expected to increase from 35,2 % in 2019 to 40,9 % in 2020. The macroeconomic and fiscal outlook is affected by high uncertainty because of the COVID-19 pandemic. In addition, there are risks underlying the budgetary projections, namely some revenue items do not seem to be estimated in line with the underlying macroeconomic projections, while the moderation of some current expenditure items seem to be based on fiscal consolidation measures that are not specified in the Programme.

                  (15)

                  In response to the COVID-19 pandemic, and as part of a coordinated Union approach, Romania has adopted timely budgetary measures to increase the capacity of its health system, contain the pandemic, and provide relief to those individuals and sectors that have been particularly affected. According to the 2020 Convergence Programme, those budgetary measures amounted to 1,2 % of GDP. The measures include a technical unemployment benefit to employees and similar benefits to other categories of worker, medical equipment and other expenditures to help fight COVID-19 and bonuses for employees in the health sector working with patients infected with COVID-19. In addition, the government has announced measures that, while not having a direct budgetary impact, will contribute to providing liquidity support to businesses. Those measures include tax deferrals, speeding up of value-added tax (VAT) reimbursements, loan guarantees for small and medium-sized enterprises (SMEs), a temporary moratorium on the payment of bank loan instalments for households and SMEs, and a deferral of rent and utility bills for SMEs. Overall, the measures taken by the government of Romania are in line with the guidelines set out in the Commission ommunication of 13 March 2020.

                  (16)

                  Based on the Commission 2020 spring forecast under unchanged policies, Romania’s general government balance is forecast to be -9,2 % of GDP in 2020 and -11,4 % of GDP in 2021. The general government debt-to-GDP ratio is projected by the Commission to reach 46,2 % in 2020.

                  (17)

                  Romania declared a state of emergency on 16 March 2020. As of 25 March 2020, all schools and shops, except for those selling primary necessity products, were ordered to close and border-crossing restrictions came into force. Movement in public areas was allowed only in limited cases, with stricter measures for people above 65. Romania also introduced a ban on international travel to certain countries and put several cities into strict quarantine. This situation has taken a toll on the production sector of the economy, as the lockdown measures have had a severely negative impact on economic activity. In the industrial sector, several manufacturers shut down production in the second half of March, with strong spillover effects in key sectors, such as the automotive industry. Similar developments are observed in the retail and hospitality sectors. The aggregated effect will push the economy into a recession in 2020. The state of emergency ended on 14 May 2020, and Romania announced that it would gradually implement de-confinement measures. Starting on 15 May 2020, measures were introduced concerning the easing of movement inside cities, the partial reopening of commercial retailing and the mandatory use of protection masks in closed public and commercial spaces, public transport and workplaces. Some manufacturers from the automotive industry gradually resumed activity at the end of April and in early May 2020. The government is preparing further measures aimed at relaunching the economy.

                  (18)

                  The pandemic has put the health system under unprecedented pressure. The crisis hit a system characterised by structural weaknesses, such as low spending and unequal access to healthcare. In this context, improving the resilience of the health system and its capacity to respond to shocks represents a key challenge. As part of the immediate response, Romania purchased critical medical products and included COVID-19 related medical costs in the minimum benefit package for the uninsured. Considerable health workforce shortages, including of family physicians, as well as outdated medical facilities, lack of medical products, insufficient training for health workers and limited continuity and integration between different levels of care weaken the resilience of the health system. Reported unmet medical needs were on the rise already before the COVID-19 crisis and access to healthcare is likely to have deteriorated. The pandemic further exposed regional disparities and the gap in healthcare coverage for low-income groups and the elderly. In the longer run, population ageing and migration are challenges that put increasing pressure on the sustainability of the health system. In light of COVID-19, it is equally important to address structural issues, including the development of preventive, outpatient and community-based care with well-targeted public policy measures. Long-term investment will be needed to reinforce the Romanian health system by securing health workers and equipment, enhancing technological and applied research and improving the coverage and accessibility of health services to all citizens, also in non-urban areas, including through the use of e-health services.

                  (19)

                  Fast economic growth in recent years triggered an improvement in social conditions. Gross disposable household income increased by 5,7 % in 2019. The risk of poverty and social exclusion, at 31,2 % in 2019, was among the highest in the Union, though on a steadily declining path. However, the pandemic’s impact on the economy may lead to the deterioration of social conditions. Poverty and social exclusion, including child poverty, in-work poverty and income inequalities are expected to increase, with vulnerable groups such as non-standard workers, undeclared workers, the self-employed, Roma, people with disabilities, the elderly and the homeless among the most exposed. Coverage and adequacy of social protection measures and the effectiveness of the tax and benefit system in redistributing income remain limited. Children in rural areas and informal settlements have limited access to good-quality early childhood education and care, adequate nutrition, healthcare and housing. Social transfers have a very limited impact on reducing poverty and the social reference index used as a basis for most social benefits has not been updated since 2008. Adequacy of the minimum income support remains one of the lowest in the Union. Though adopted in 2016, the minimum inclusion income reform has been further postponed to 2021. Social and essential services remain largely insufficient, including in areas such as water and sanitation, energy and housing. Moreover, territorial distribution is uneven and characterised by significant rural-urban and regional disparities. This may limit the capacity to counteract the impact of the pandemic. The potential of the social economy to improve social conditions is still untapped.

                  (20)

                  Over 2019, labour market developments remained positive, but disparities between regions, rural and urban areas and socioeconomic groups persist. High levels of inactivity are registered, in particular for women, young people, the low-skilled, people with disabilities and older people. In the context of the COVID-19 outbreak, existing challenges are likely to deepen, together with rapidly increasing unemployment and inactivity. According to the Commission 2020 spring forecast, unemployment is expected to rise to 6,5 % in 2020 and recover to 5,4 % in 2021. Undeclared work remains a challenge and its negative impact might be exacerbated in the current context, underlining the need to support the transition into declared work. Therefore, timely tailor-made services addressing the needs of vulnerable groups and workers affected by the crisis are essential. In addition to the recently initiated technical unemployment scheme, developing access to short-time work schemes, promoting income-support measures and allowing for flexible working arrangements and teleworking for the workers affected, with the involvement of social partners, are crucial to strengthening the resilience of the labour market in the short and long term.

                  (21)

                  Persisting skills mismatches and skills shortages, underpinned by demographic developments and the limited labour market relevance of education and training, limited Romania’s economic growth potential even before the pandemic. The share of adults participating in learning activities, at 1,3 % in 2019, is one of the lowest in the Union. Low participation in early childhood education and care widens inequality of opportunities between pupils. The equity, inclusiveness and quality of education remain important challenges and strategic reforms in this area are needed. Despite some progress in recent years, Romania has a high share of early leavers from education and training (15,3 % in 2019) and young people not in education, employment or training (14,7 %, a slight increase on 2018). There is still no integrated, nationwide mechanism targeting early school leaving. Educational outcomes, especially in rural and economically deprived areas, are not improving. Participation in higher education is low and remains insufficiently aligned to labour market needs. The number of graduates in science, technology, engineering and mathematics (STEM) remains low. Romania scores poorly on many components of the Digital Economy and Social Index, including digital public services, digital skills of the overall population and digitalisation of businesses. Basic digital skills and basic software skills are among the lowest in the Union. Due to uneven digital infrastructure and insufficient digital skills, the shift to distance learning caused by the COVID-19 outbreak poses challenges for education and training institutions, educators and students, in particular disadvantaged students and Roma.

                  (22)

                  Due to the COVID-19 pandemic and the resulting lockdown measures, supply chains have been interrupted throughout the country, businesses have had to reduce activities or even close, and people have been unable to work. Businesses of all sizes – particularly SMEs – are strongly affected by the disruption of trade and the lockdown and are facing liquidity constraints and bankruptcy risks. The government adopted a set of measures combining tailored assistance to businesses and income protection for all workers affected. To recover from the crisis, additional resources will be needed to keep supporting businesses and households. The services sector will need particular attention as it is hardest hit and some subsectors are expected to contract for longer than manufacturing. Government response measures include the creation of a public guarantee scheme (IMM Invest) with an envelope of RON 15 billion to offer State guarantees to SMEs contracting interest-free loans to finance investment and provide working capital. These guarantees will also be beneficial for banks, which need to remain well capitalised and liquid in order to ensure the necessary flow of credit to households and companies. Furthermore, due to the so far rather limited role of banks in providing credit to businesses – in particular to innovative SMEs – loan guarantees alone might not be enough.

                  (23)

                  To foster the economic recovery, it will be important to front-load mature public investment projects and promote private investment, including through relevant reforms. The crisis showed even more clearly that Romania has a critical need to relaunch public infrastructure works in fields such as sustainable transport, clean energy, and environmental and digital service infrastructure. Urban transport suffers from poor sector organisation and the weak administrative capacity of local providers. The waste management system continues to be characterised by very low recycling of municipal waste and very high landfill rates. Implementing the National Energy and Climate Plan will require investment in clean production and use of energy, as well as the reconversion of mono-industrial and carbon intensive regions. Efforts need to be stepped up for the extension and modernisation of drinking water and wastewater infrastructure. Investments in the air-monitoring network is also indispensable due to serious structural shortcomings. There is also a need to modernise and ensure interoperability of all the digital public services that generate information-sharing, including in the social, education and health areas. Large regional disparities and the low productivity of some sectors are detrimental to long-term sustainable growth. Equally important are investments to promote the economy’s competitiveness by supporting research and development (R & D) activities, innovative SMEs and integration into the Union’s strategic value chains. R & D investment by firms remains subdued and limited to a small number of subsectors which are highly dependent on foreign direct investments. Declining public R & D funding has resulted in poor scientific and technological quality and weak academia-business links. The programming of the Just Transition Fund, which is the subject of a Commission proposal, for the period 2021-2027 could help Romania to address some of the challenges posed by the transition to a climate-neutral economy, in particular in the territories covered by Annex D to the 2020 country report. This would allow Romania to make the best use of that Fund.

                  (24)

                  Reform of the public administration is stalling. There is no effective framework in place for strategic and budgetary planning, which has a knock-on effect on the strategic vision for long-term development of the country, the prioritisation of actions and policy coordination at the central and local level. The sectoral strategic framework is fragmented and sometimes overlapping while actions to be taken within sectors are not prioritised. The strategic management role of the General Secretariat of the Government is still not consolidated. High fragmentation of competencies and resources continues to affect the delivery of public services, especially at local level and in poor communities. Red tape and insufficient capacity to deliver quality services, including digital, are negatively impacting on citizens and businesses, especially during thes crisis. Cumbersome administrative procedures for setting up businesses as well as regulatory requirements imposed on services providers, including regulated professions, further impede market development. Reinforced cooperation between Romanian market surveillance authorities and customs authorities can help reducing the volume of non-compliant products imported from outside the Union. Frequent reorganisations and overuse of temporary management hamper the independence of the administration. The implementation of corporate governance for State-owned enterprises remains a challenge.

                  (25)

                  Predictability of decision-making remains a major issue. Before the crisis, only around a third of the annual government plan was respected. The number of emergency ordinances passed remained very high, creating uncertainty and likely hampering investment. For instance, GEO 114/2018 had major socioeconomic effects on several sectors, including the financial sector. While the provisions with adverse impact on the banking sector were reversed, some of the measures potentially affecting the long-term viability of second-pillar pension funds still remain in place. The predictability and stability of public procurement legislation remain important challenges. The efficiency of public procurement continues to be an issue, as does the irreversibility of certain measures, notably the streamlining of ex ante control. There is little progress in improving the governance, quality and effective use of regulatory impact assessments. There is no institutional framework for quality control at government level and options for setting up a regulatory impact assessement board are still being assessed. The functioning of social dialogue remains limited, in particular at sector level, while a meaningful and continuous involvement of social partners is key for the success of any exit and recovery strategy in the light of the current crisis. The established institutional framework for consultation is not adequately used to feed into the decision-making process and does not engage social partners sufficiently in the design and implementation of reforms. Discussions on changes to the social dialogue law and the revision of economic sectors have stalled. The follow-up to the International Labour Organization’s recommendations issued in April 2018 is still uncertain. The lack of a permanent objective mechanism to determine the minimum wage may weigh on the business environment.

                  (26)

                  While the country-specific recommendations set out in this Recommendation (‘the 2020 country-specific recommendations’) focus on tackling the socioeconomic impacts of the pandemic and facilitating the economic recovery, the 2019 country-specific recommendations also covered reforms that are essential to address medium- to long-term structural challenges. The 2019 country-specific recommendations remain pertinent and will continue to be monitored throughout next year’s European Semester. That includes the 2019 country-specific recommendations regarding investment-related economic policies. All of the 2019 country-specific recommendations should be taken into account for the strategic programming of post-2020 cohesion policy funding, including for mitigating measures and exit strategies with regard to the current crisis.

                  (27)

                  Following several headwinds in recent years, pressures on the banking sector have subsided, as several measures which caused concern in the past, including the bank tax, were discontinued at the beginning of 2020. The banking sector has entered the current COVID-19 crisis well capitalised and liquid, while the non-performing loans ratio declined below 5 %. The measures adopted by the government to support households and corporates, in particular SMEs, are also important for maintaining banking-sector resilience and the capacity of banks to absorb shocks. Commercial banks have also taken steps to support clients, such as the postponement of principal and interest payments, the extension of credit repayment, ensuring ATM liquidity and reducing the fees for online services. On 20 March 2020, the National Bank of Romania lowered the monetary policy rate and has since started purchasing RON-denominated government securities in the secondary market to ensure the smooth financing of the real economy and the public sector. In spite of the adopted measures, including the prudential flexibility granted by supervisors, asset quality is likely to deteriorate in the coming months. In this respect, maintaining prudent lending standards and prioritising support to viable borrowers will contribute to safeguarding asset quality in the banking sector. Furthermore, ensuring a stable and predictable regulatory environment for banks is an important precondition for preserving their active role in the provision of credit to the economy and in supporting economic recovery.

                  (28)

                  Significant legal modifications and political pressure on the judiciary in 2017, 2018 and in the largest part of 2019 have affected the efficiency, quality and independence of the justice system and its capacity to investigate and penalise high-level corruption. While the government currently supports actions to prevent and penalise corruption, and has shown willingness to reverse some of the most controversial measures, Romania has not yet made the necessary legislative changes. These issues are the subject of monitoring under the cooperation and verification mechanism. Under this mechanism, the Commission continues to monitor judicial reform and the fight against corruption in Romania. These areas are therefore not covered in the 2020 country-specific recommendations for Romania, but are relevant for developing a positive socioeconomic environment in the country.

                  (29)

                  The European Semester provides the framework for continuous economic and employment policy coordination in the Union, which can contribute to a sustainable economy. In their 2020 National Reform Programmes, Member States have taken stock of progress made in the implementation of the United Nations Sustainable Development Goals (SDGs). By ensuring the full implementation of the 2020 country-specific recommendations, Romania will contribute to the progress towards the SDGs and to the common effort of ensuring competitive sustainability in the Union.

                  (30)

                  In the context of the 2020 European Semester, the Commission has carried out a comprehensive analysis of Romania’s economic policy and published it in the 2020 country report. It has also assessed the 2020 Convergence Programme, the 2020 National Reform Programme and the follow-up given to the country-specific recommendations addressed to Romania in previous years. The Commission has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in Romania, but also their compliance with Union rules and guidance, given the need to strengthen the Union’s overall economic governance by providing Union-level input into future national decisions.

                  (31)

                  In the light of this assessment, the Council has examined the 2020 Convergence Programme and its opinion (9) is reflected in particular in recommendation (1) below.

                  (32)

                  In the light of the Commission’s in-depth review and this assessment, the Council has examined the 2020 National Reform Programme and the 2020 Convergence Programme. The 2020 country-specific recommendations take into account the need to tackle the COVID-19 pandemic and facilitate the economic recovery as a necessary first step to allow for an adjustment of imbalances. The 2020 country-specific recommendations directly addressing the macroeconomic imbalances identified by the Commission under Article 6 of Regulation (EU) No 1176/2011 are reflected in recommendation (4),

            HEREBY RECOMMENDS that Romania take action in 2020 and 2021 to:

                  1.

                  Pursue fiscal policies in line with the Council Recommendation of 3 April 2020, while taking all necessary measures to effectively address the pandemic, sustain the economy and support the ensuing recovery. Avoid the implementation of permanent measures that would endanger fiscal sustainability. Strengthen the resilience of the health system, in particular with regard to health workers and medical products, and improve access to health services.

                  2.

                  Provide adequate income replacement and extend social protection measures and access to essential services for all. Mitigate the employment impact of the COVID-19 crisis by developing flexible working arrangements and activation measures. Strengthen skills and digital learning and ensure equal access to education.

                  3.

                  Ensure liquidity support to the economy for the benefit of businesses and households, particularly SMEs and the self-employed. Front-load mature public investment projects and promote private investment to foster the economic recovery. Focus investment on the green and digital transition, in particular on sustainable transport, digital service infrastructure, clean and efficient production and use of energy and environmental infrastructure, including in the coal regions.

                  4.

                  Improve the quality and effectiveness of public administration and the predictability of decision-making, including through adequate involvement of social partners.

         Done at Brussels, 20 July 2020.

               For the Council

               The President

            J. KLOECKNER

         (1)  OJ L 209, 2.8.1997, p. 1.

         (2)  OJ L 306, 23.11.2011, p. 25.

         (3)  OJ C 301, 5.9.2019, p. 135.

         (4)  Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation of the excessive deficit procedure (OJ L 209, 2.8.1997, p. 6).

         (5)  Regulation (EU) 2020/460 of the European Parliament and of the Council of 30 March 2020 amending Regulations (EU) No 1301/2013, (EU) No 1303/2013 and (EU) No 508/2014 as regards specific measures to mobilise investments in the healthcare systems of Member States and in other sectors of their economies in response to the COVID-19 outbreak (Coronavirus Response Investment Initiative) (OJ L 99, 31.3.2020, p. 5).

         (6)  Regulation (EU) 2020/558 of the European Parliament and of the Council of 23 April 2020 amending Regulations (EU) No 1301/2013 and (EU) No 1303/2013 as regards specific measures to provide exceptional flexibility for the use of the European Structural and Investments Funds in response to the COVID-19 outbreak (OJ L 130, 24.4.2020, p. 1).

         (7)  Council Decision (EU) 2020/509 of 3 April 2020 on the existence of an excessive deficit in Romania (OJ L 110, 8.4.2020, p. 58).

         (8)  Council Recommendation of 3 April 2020 with a view to bringing an end to the situation of an excessive government deficit in Romania (OJ C 116, 8.4.2020, p. 1),

         (9)  Under Article 9(2) of Regulation (EC) No 1466/97.