Romania to sign the European Fiscal Compact this Friday

Newsroom 01/03/2012 | 12:41

The Government approved yesterday the signing of the Treaty on stability, coordination and governance in the Economic and Monetary Union (European Fiscal Compact), which enforces strict budget rules for member states that ratify it.

President Traian Basescu has left on a 2 day visit to Brussels for the spring European Council to sign the treaty. The council will also establish a common ground for the next G8, G20 and UN meetings.

This Friday, the heads of state and governments of the 25 EU members that approved the treaty will sign it, apart from the UK and the Czech Republic that opposed it.

The treaty pushes for fiscal consolidation in all member states, as the budgetary structural deficit must not exceed 0.5 percent of GDP, and the government debt needs to remain below 60 percent of GDP. Countries with lower debt, such as Romania, can reach a structural deficit of 1 percent of GDP.

Members that will not transpose the deficit and government debt regulations into national legislation will be under scrutiny from the European Court of Justice. Countries that breach the budget rule will receive penalties up to 0.1 percent of GDP.

Traian Basescu said earlier this year that these provisions will be included in the national Constitution by end-2013.

Romania had public a debt of RON 222.8 billion or 39.6 percent of GDP at end-December 2011, while the deficit stood at 4.3 percent last year. In 2012, the deficit should be lowered to under 3 percent in ESA terms.