The Commission will reassess Romania’s budgetary situation in spring 2021 and, if appropriate, will propose new steps under the excessive deficit procedure.
“We would like to engage with the Romanian Government to discuss the necessary action,both immediately and in the medium-term,to bring Romania’s fiscal situation on to a sustainable path,” the Commission said.
Th EC also warns that under a no-policy-change scenario, Romania’s debt is projected to exceed 60% in 2022 and go beyond 100% of GDP in 2027.
“This risk level indicates that there are significant fiscal vulnerabilities that need to be addressed by appropriate policy measures. Given the seriousness of the fiscal situation, we would also strongly encourage you to consider further fiscal policy initiatives already as of 2021 and on both the revenue and expenditure sides. These initiatives should,as part of a concerted medium-term fiscal strategy, set the deficit on a declining path and prevent a steep increase in the debt-to-GDP ratio,” it said.
As the coronavirus crisis also led to an unprecedented economic crisis, the Romanian government stepped up it borrowing plans in 2020 to cover the deficit of nearly 9% of GDP. The country’s public debt grew by RON83 billion in the first ten months, reaching RON457 billion end-October, or 47% of GDP.
Prime minister Florin Citu, who was finance minister in 2020, said he plans to tighten public spending and targets lowering the budget deficit to 3-4% of GDP in 2023.