Economy

European Commission warns Romania to reduce deficit

2 weeks ago

The European Commission (EC) has warned Romania in its latest Semester Package to significantly reduce its budget deficit which is expected to exceed the European Union’s 3% upper limit – set out in the Stability and Growth Pact – this year at 3.3%.

The Commission said since the Semester Report in June – which recommended Romania to reduce its public deficit by 1% – “no effective action was taken in response to the Council recommendation” and that “in light of developments since and following the lack of effective action by Romania to correct its significant deviation, the Commission now proposes a revised recommendation of an annual structural adjustment of at least 1% of GDP in 2019.

With Romania’s expected to be around EUR 200 billion in 2019, this means a cut of at least two billion euros in budget expenditures.

Romania’s budget deficit jumped from 0.5% in 2015 to 2.9% in 2016 and was just below the EU threshold in 2017 at 2.88%, but this year it is projected to reach 3.3%, 3.4% in 2019 and 4.7% 2020 which, the Commission warned, “is the highest deficit in the EU”.