“If the preliminary budget data is confirmed, the authorities will inform the European Commission by April 1 that the 2012 cash-flow based deficit was below the bloc’s limit of 3% of the gross domestic product,” Deputy Finance Minister Catalin Doltu said in a statement after a meeting of the Ecofin Council in Brussels.
Romania expects it has lowered its budget deficit to around 1.8% of GDP in 2012, from 4.3% of GDP a year earlier. For 2013, the country targets a deficit of 2.1% of GDP.
The European Commission will analyze whether Romania can keep its budget deficit below 3% of GDP in the medium term and it could recommend that Ecofin cancel the excessive-deficit procedure.
“The general framework to improve fiscal governance is favorable: we have a law on fiscal responsibility, we have founded the Fiscal Council, we have refined our prognosis models and we have reduced the number of annual budget revisions,” Doltu said.
The European Commission in 2009 recommended an excessive-deficit procedure be launched against Romania, due to a budget gap of 5.4% of GDP in 2008. The eastern European country was given until December 2012 to lower its deficit.
Consequently, Romania had to implement severe measures to lower its deficit, including a 25% cut in the public wage bill and a five percentage point increase in the sales tax.