The European Commission accepted a milder fiscal consolidation trajectory for Romania, namely general government budget deficits of 5% of GDP this year and 3.5% of GDP in 2024, Ziarul Financiar announced.

This would be 0.6pp and 0.5pp, respectively, above the targets envisaged by the Government previously for 2023-2024 under the Excessive Deficit Procedure. Failure to observe the fiscal consolidation procedure results in lower cohesion funds made available from the EU budget.

The European Commission has not commented on the new targets, of which the first one (for 2023) was previously circulated by local media in the context of the latest visit paid by EU experts in Bucharest.

Indeed, Ziarul Financiar remarks that the government officials no longer mention the 4.4%-of-HDFP deficit target for this year, replacing it with the 5%-of-GDP target in the context of the negotiations for the fiscal corrective package.

The differential between the two targets is RON 8bn: RON 78.4bn deficit instead of RON 70bn, for a GDP of RON 1,600bn estimated for this year.

Romania is currently in the excessive deficit procedure after reaching a budget deficit of 6.4% of GDP in 2019, instead of the 3% assumed by the annexes of the European Union treaties. If it does not fall into deficit, the European Commission and the Council, in April 2024, will initially look at why Romania did not meet the deficit target.

(Photo: Edgars Sermulis/ Dreamstime)

iulian@romania-insider.com