The European Commission (EC) will open the excessive deficit procedure for Romania in March and will suggest Romania to cut its public budget under 3% of GDP as soon as this year, but such tight fiscal policy would hurt growth and we do not wish this, Romanian finance minister Florin Citu stated in a conference on Thursday, February 13.
He added that the budget deficit will not return under 3% of GDP this year or next year, but this should happen in 2022.
“The fiscal-budgetary strategy already shows that the budget deficit will decrease below 3% in 2022. When we build the budget for 2020, we considered that the excessive deficit procedure will be initiated. We could not avoid it, we knew very well that we would exceed 3%, and I said this from my first press conference. We have a set of measures to reduce the deficit in the future, which we presented in the fiscal-budgetary strategy,” minister Citu said.
He added that the excessive deficit procedure does not rule out pension and wage increases in the public sector. “Salaries and pensions have been budgeted, there is no discussion,” Citu said, quoted by Agerpres.
He stressed that the Fiscal Code will not be amended this year, and the launch of the excessive deficit procedure does not mean corrections.
Romania’s budget deficit spiked to 4.6% of GDP last year and the Government targets 3.6% of GDP gap in 2020. The budget execution this year supports expectations for an even smaller [than 3.6% of GDP] deficit in 2020, finance minister Citu stated on a rather optimistic note. The Fiscal Council expects a deficit of over 4.6% of GDP this year.
The excessive deficit procedure (EDP) is an action launched by the European Commission against any EU member state that exceeds the budgetary deficit ceiling imposed by the EU's stability and growth pact legislation, namely 3% of GDP.
(Photo source: Inquam Photos/Octav Ganea)