EC warns Romania on deviation from medium-term budgetary objective

The European Commission issued a warning yesterday on Romania’s significant deviation from the medium-term budgetary objective in 2016, according to an EC press release. It is the first time when such a procedure is initiated. Romania is expected to take measures to correct the deviation based on recommendations from the European Council. Romanian authorities will have the opportunity to take corrective action to avoid the opening of an excessive deficit procedure. These warnings are part of a report published by the European Commission each spring, with economic recommendations for the 28 EU Member States. Liviu Dragnea, the leader of the governing Social Democratic Party (PSD), was not happy with the EC’s new warning. “In Europe, there are two voices on fiscal discipline. When France and Spain exceed the 3% budget deficit threshold, nobody minds. When Romania has the highest economic growth in EU, we are again reminded about austerity,” Dragnea said. “I think that rules should be the same for all. Romanians’ salaries are 2-3-4 times lower than the Europeans’. We have to increase them to stop young people from leaving the country,” he added. At the end of February, Valdis Dombrovskis, the vice-president of the European Commission, and Pierre Moscovici, European Commissioner for Economic and Financial Affairs, sent a letter to Romanian Finance minister Viorel Stefan, warning that the country’s budget deficit could exceed 3% this year, based on available data, and asking the Government to take clear measures to reduce it. The letter also said that Romania was estimated to have significantly deviated from its medium-term budgetary objective (MTO) last year. In response, the Finance Ministry issued a statement saying that Romania will meet the deficit target this year, namely under 3% of the GDP. Romania was among the four European Union countries which had budget deficits equal to or higher than 3% of their gross domestic product (GDP) in 2016, according to the EU’s statistical office Eurostat. The country had a deficit of 3% last year. editor@romania-insider.com