The EU calls for budgetary caution
The European Commission wants to collaborate with the Romanian Government on the 2021 budget
Roxana Vasile, 08.01.2021, 14:00
At the end of December, the European Commission issued a warning to the Romanian center-right coalition government: in a letter sent to Bucharest, the Commission stated that it wanted to have a dialogue with the Romanian Executive on the 2021 budget and on immediate and medium-term corrective measures, so that the situation of public finances did not become unsustainable. In the absence of appropriate measures, Romania’s public debt could reach 100% of the GDP in 2027, and covering it becomes risky, said the Commission, which added: Given the seriousness of the fiscal situation, we strongly encourage you to consider other fiscal policy initiatives as of 2021, both in terms of revenues and expenditures.
The letter appeared in the press in Bucharest this week, almost simultaneously with a new appeal by the Vice President of the European Commission, Valdis Dombrovskis, according to which the Romanian Government must keep the budget deficit under control, as in 2020 spending rose sharply, and revenues fell considerably due to the pandemic. We expect from Romania a robust budget for 2021, wrote, on Thursday, the Brussels official after a telephone conversation with the Minister of Finance, Alexandru Nazare. The latter promised that promoting investment remained a priority, just like the use of European funds. Minister Nazare also gave assurances that the Romanian authorities are considering a fiscal consolidation and a gradual reduction, starting this year, of the budget deficit, which in 2024 would get below the level of 3% allowed by the European regulations. All this without affecting, however, Romania’s capacity to adopt measures meant to support the economy in this difficult situation generated by Covid-19. In turn, the Minister of Economy, Entrepreneurship and Tourism, Claudiu Năsui, spoke, in a televised interview, about the need for the massive reform of state-owned companies.
The opposition Social Democrats, in power until the autumn of 2019, believe that the European Commission’s warning confirms that the current center-right government in Bucharest will be forced to take fiscal consolidation measures, which means austerity. According to the president of the Social Democratic Party, Marcel Ciolacu, unlike the other countries in the European Union, Romania spent money without having a serious plan of economic stimulation and recovery, beating, instead, record after record in terms of contracting loans. (M. Ignatescu)
