Commission worried Romania will miss 2017 deficit target

Angela Cristea, head of the EC Representation in Romania, said the Commission would rather be worried about the situation and be proved wrong at a later date. [European Commission]

The European Commission is still concerned that Romania will go from registering the highest growth in the EU to racking up the biggest budget deficit. But Bucharest insists there is no cause for concern. EURACTIV Romania reports.

Head of the EU executive’s representation in Romania Angela Cristea yesterday (15 March) shared the institution’s fears that the Eastern European country could record the highest increase in budget deficit this year.

Romania’s government has told the Commission that there is no cause for alarm but the executive’s representative seemed unconvinced at the presentation of the “Economic report for Romania 2017.”

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“Romania registered in 2016 the highest economic growth in Europe, at 4.9%. At the same time, the report draws attention to the risk that this year it will have the highest public deficit increase,” Cristea warned.

“The government said that there is no reason to be worried in this respect, but we are. It’s better to be worried and nothing happens, and to conclude in next year’s report that we worried in vain,” she added.

Cristea explained that the Commission had received assurances from Bucharest that its deficit would not pass the threshold of 3% of GDP that the EU allows.

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She also highlighted the high social inequality in Romania, a trend that has persisted since 2012: “We see a poverty tendency but also an increase in social inequalities. It’s not a new phenomenon but a trend that has lasted since 2012. It’s not unique to Romania and we see it in other EU states too.”

According to economic forecasts from the winter published in the middle of February by the EU executive, Romania’s public deficit might reach 3.6% of GDP in 2017, compared with the 3.2% that was estimated in the autumn. In 2018, there are fears it will hike to 3.9% of GDP due to a significant increase in pensions scheduled for July 2017.

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But in a sign that Bucharest is not totally confident it will meet its goals, Finance Minister Viorel Ștefan said at the same event that the government is considering measures to cut costs if it starts to deviate from targets.

According to International Monetary Fund projections released in October, Romania registered the highest economic growth in Europe for 2016, followed closely by Ireland. Europe overall was set to register 2% economic growth and Emerging Europe, a region including Romania, was on track to top 3.3% of GDP.