EC warns Romania over deviation from fiscal adjustment path

Romania's budgetary planning has regularly ignored the provisions of the national fiscal framework, the EU Commission (EC) notes in a report to be further endorsed by the EU Council.

In 2016, Romania departed from the medium-term budgetary objective and has been on a divergent path since, the EC says, issuing updated recommendations for tighter fiscal consolidation. Other recommendations refer to preserving the stability of the pension system, including the mandatory private pensions, improving the quality of education, boosting investments in transport infrastructure and sustainable energy sector, and secure predictable regulatory environment.

The EU Council will recommend Romania to achieve steeper structural adjustments of 1% of GDP this year and 0.75% of GDP in 2020 if it endorses the draft document inked and published by the EC. Last June, the EU Council recommended Romania 0.8%-of-GDP corrections for each of the two years 2018 and 2019 but found in December that Romania had not taken sufficient action in response.

Romania does not plan to achieve the medium-term budgetary objective, set at a structural deficit of 1% of GDP, over the 2019-2020 horizon under the 2019 Convergence Programme submitted by the Romanian government, the EC outlines. Moreover, based on 2018 outturn data Romania significantly deviated from the recommended adjustment in 2018.

In line with Article 121(4) TFEU and Article 10(2) of Regulation (EC) No 1466/97, the Commission issued a warning to Romania on June 5, 2019, that a significant deviation from the adjustment path toward the medium-term budgetary objective was observed in 2018.

(Photo source: Pixabay.com)