These restrictions will be implemented through a bill, which the ministry expects to put forward in September and enter force in 2013.
According to Voinea, when the public debt exceeds 35% of GDP, a rule automatically activates whereby public spending would not be allowed to grow faster than the rate of inflation. When the debt goes over 40% of GDP, local budgets will have to be balanced without transfers from the state budget. When the public debt tops 45% of the GDP, the government will be barred from providing state guarantees and subsidies, among other things.
Joint teams from the International Monetary Fund, the European Commission and the World Bank are due to arrive in Bucharest next week for the sixth review of the precautionary loan agreement signed last year. Negotiations over several fiscal measures proposed by the Ponta Government and an evaluation of the draft budget for 2013 are on the agenda.
Although the European Union statistics state Romania’s public debt is at 36.3% of the GDP, Voinea explained the new rules would take into account the net debt, which leaves out the EUR3.3 million liquidity buffer made up by the Treasury and means the public debt is around 34% of the GDP.
Romania has one of the lowest public debts in the EU and, according to the euro convergence criteria, the maximum level of debt is 60% of the GDP, which Voinea and many economic analysts consider too high.
On the other hand, Romania is facing an excessive deficit procedure and has pledged to the European Commission to end the year with a deficit (under ESA 95) below 3% of the GDP.