European Commission warns Romania for significant deviation of public deficit in 2017, demands measures to cap budget expenditure

The European Commission issued a warning to Romania on Wednesday for significant deviation from the adjustment path toward the medium-term budgetary objective, estimating a risk of a deviation from that recommendation in 2018, and recommends the government to take the necessary measures to limit the growth rate of expenditure.

“The Council also adopted a subsequent recommendation confirming the need for Romania to take the necessary measures to ensure that the nominal growth rate of net primary government expenditure does not exceed 3.3 percent in 2018, corresponding to an annual structural adjustment of 0.8 percent of GDP,” the Commission said.

For 2019, the Commission recommended Romania to take the necessary measures to ensure that the growth rate of net primary government expenditure does not exceed 5.1 percent.

The Commission estimates there is a risk of a deviation from that recommendation in 2018 and 2019.

The European Commission 2018 spring forecast projected for Romania a public deficit of 3.4 percent and 3.8 percent of GDP for 2018 and 2019, above the 3 percent-of-GDP Treaty reference value.

“Overall, the Council is of the opinion that significant further measures will be needed as of 2018 to comply with the provisions of the Stability and Growth Pact, in light of a strongly deteriorating fiscal outlook, in line with the recommendation addressed to Romania with a view to correcting the significant observed deviation from the adjustment path toward the medium-term budgetary objective,” the Commission points out.