European Commission Urges Romania to Adjust Ballooning Public Deficit

The Commission on Wednesday released its European Semester Autumn Package: Bolstering inclusive and sustainable growth, in which it sets out EU's economic and social priorities for 2019 and presents opinions on draft budgetary plans.

For Romania, the Commission has established that no effective action was taken in response to the Council recommendation of June and proposes that the Council adopts a revised recommendation to Romania to correct its significant deviation from the adjustment path towards the medium-term budgetary objective. In June 2018, the Council issued a recommendation of an annual structural adjustment of 0.8% of GDP in both 2018 and 2019 to Romania under the Significant Deviation Procedure (SDP).

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.

The public deficit has increased in Romania from 0.5% of GDP in 2015 to 2.9% of GDP in 2016 and is forecast to reach 3.3% of GDP in 2018, 3.4% of GDP in 2019 and 4.7% of GDP in 2020. This is the highest deficit in the EU, the Commission noted.

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