Commission cautions new member states on budgetary policies

Assessing the last group of convergence programmes on 7 March 2007, the Commission has urged Bulgaria and Romania to continue with sound fiscal policies.

The Commission criticised the two new member states’ for their “loosening of fiscal policies in 2007 at a time of favourable economic growth”, which it thinks is “inconsistent with the objective of running prudent fiscal policies and ensuring sustainable convergence”.

Economic and Monetary Affairs Commissioner Joaquín Almunia said: “Bulgaria is encouraged to maintain strong budgetary positions and Romania should aim for a more ambitious budgetary consolidation path.”

On 6 March 2007, the International Monetary Fund (IMF) made similar recommendations. It stated that there were “increased risks due to the widening current-account deficit” and it “strongly urges the [Romanian] authorities to tighten fiscal and wage policies”.

Concerning Latvia’s convergence programme, the Commission said that having reached the highest growth rate in the Union at 11.5% in 2006, there were clear signs that the Latvian economy was overheating and pointed out the “risks to the achievement of the budgetary targets” in 2008.

The Commission also examined the stability programmes of Belgium and Spain and was satisfied with their medium-term budgetary planning.

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