The European Commission on Wednesday made public its specific recommendations for each member state for 2018
The European Commission on Wednesday made public its specific recommendations for each member state, in which it defines its economic policy guidelines for the next 12 to 18 months. The Commission has again warned Romania to keep its structural deficit in check and urgently address budget deviations or face an intensification of surveillance procedures. Romania is already the subject of the Significant Deviation Procedure from its medium-term budgetary objective according to which the country has to maintain the level of structural deficit under 1% of the GDP.
The Commission says that, last year, the deficit level amounted to 3.3% of the GDP. "We address a warning today to both Hungary and Romania on the existence of a significant deviation from the adjustment path toward the medium-term budgetary objective in 2017. [...] And for Romania, which is already subject to a significant deviation procedure, we recommend that the Council issue a decision on non-effective action and a renewed recommendation to take measures in 2018 and 2019, again to correct the significant deviation", said the European Commissioner for Economic and Financial Affairs, Pierre Moscovici.
In response, the Finance Minister Eugen Teodorovici believes Romania is not facing sustainability risks in the short run. He has pointed out that the number of recommendations in the latest European Commission report has dropped from eight in 2013 to three. He has also presented several measures to correct the structural budget deficit, including better collection of excise duties on fuel and cigarettes. The government also plans to cut spending and has already issued regulations to this end. Brussels has also called on Bucharest to fully implement the tax framework and improve voluntary payment and tax collection.
Romania must ensure that the nominal growth pace of government spending does not exceed 3.3% in 2018. On the other hand, the report of the European Commission has warned that the risk of poverty and social exclusion is very high in Romania, especially among families with children, persons with disabilities, the Roma and the rural population. The Commission recommends putting in place a mechanism to establish a minimum salary based on objective criteria, improving qualifications and providing quality education, in particular for the Roma and the children in the rural areas.
Romania must send an official reply in writing to the European Commission by the 15th of October this year. Also on Wednesday, the Commission published its convergence report for 2018, which reads that Romania currently fulfills only one out of the four economic criteria necessary for adopting the euro, namely that relating to public finances. It does not however meet the price stability, exchange rate and long-term interest rate criteria and its legislation is not fully compatible with the Treaty on the Functioning of the European Union. (translated by Cristina Mateescu)