European Council Urges Romania To Take Deficit Correction Measures By Jan 2010

On the basis of the outlook provided by the Commission in its spring 2009 economic forecasts, the Council calls on Romania to reduce its deficit below the 3% of GDP threshold by 2011, according to a statement issued after the monthly meeting of the Economic and Financial Affairs Council (ECOFIN), which reunites the Economics and Finance Ministers of EU's Member States.

Romania's budget deficit reached 5.4% of the gross domestic product in 2008. Romania requested assistance from international lenders in March, obtaining EUR20 billion, including a EUR5 billion loan from the EU, and EUR13 billion from the International Monetary Fund.

"Its convergence program envisages a reduction of its government deficit below 3% in 2011. To achieve this, the Council calls on Romania to ensure an average annual fiscal effort of at least 1.5% of GDP in structural terms, starting in 2010," the statement reads.

The Council also launched the excessive deficit procedures against Latvia, Lithuania, Malta, and Poland, issuing recommendations on corrective action to be taken, and issued a revised recommendation to Hungary on measures to be taken in order to correct its excessive deficit.

"The Council finds that special circumstances in Latvia, Lithuania, Poland and Romania allow for correction of the deficit in the medium term. In the case of Malta, it considers no departure from the standard deadline for correcting the deficit to be warranted. As regards Hungary, it finds that a revised timetable for correction of its deficit is justified," the statement said.

Thus, Latvia has to reduce its deficit below the 3% of GDP threshold by 2012, Lithuania needs to do so by 2011, Malta by 2010, Hungary by 2011, and Poland by 2012.

ECOFIN ministers endorsed the plans announced last month by the European Commission, EU's executive arm.

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