ECOFIN warns Romania to limit increase in net primary govt. spending

The EU Council of Economic and Financial Affairs (ECOFIN) on December 6 officially warned the Romanian Government not to allow the net primary government expenditures (the primary general government budget) to rise more than 4.5% compared to 2018.

The structural fiscal balance would thus decrease by 1pp (from 3.3% of GDP estimated for this year), according to EC.

The request was included in the recommendations issued by the EU Council on November 21, to be considerred by ECOFIN. The Council issued the recommendations with a view to correcting the significant observed deviation from the adjustment path toward the medium-term budgetary objective in Romania.

The letter sent by the Romanian government after November 21, in response to the recommendations, did not convince ECOFIN members to sweeten the requests, MEP Siegfried Muresan informed, quoted by Adevarul daily. While attending ECOFIN meeting this week, Romania’s Finance minister Eugen Teodorovici reportedly advocated in favour of more flexible application of the fiscal consolidation policies from country to country.

The European Commission recommended Romania, in the November 21 European Semester assessment, to cut the structural budget deficit by 1% of GDP in 2019 (from 3.4% of GDP in 2018), in order to secure convergence toward the 1%-of-GDP medium-term objective. A correction of such magnitude would not put country’s economic growth at risk, the Commission added.

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