The European Commission (EC) reportedly agreed not to lower the financing under the Resilience Facility and multiannual financial framework [MMF] for Romania if the government manages to at least reduce the public deficit to GDP ratio this year compared to the 5.7% figure in 2022, according to Hotnews.ro.

Romania targeted a 4.4%-of-GDP public deficit this year to bring the figure under 3% in 2024. However, after five months, the deficit reached 2.3% of GDP, and it heads to 6%-7% in full-year unless corrective measures are taken.

The deadline for a final decision in this regard was reportedly deferred for next week after it was expected for the end of this week. 

The EC reportedly agreed that Romania should choose from the corrective fiscal measures proposed in the World Bank study conducted for Romania as part of the Resilience Facility.

"All options are on the table, but they are still negotiating, and the final decision does not seem to come this week, maybe not next week," one of the participants in the discussions between government and business associations told Cursdeguvernare.ro.

A balance is sought between cutting expenditures and increasing revenues by hiking tax rates, but not enough measures to cut expenditures are on the agenda, sources also said.

"One thing is certain, both sides agreed that combined measures are needed, both to increase budget revenues but also to optimize budget spending. Unfortunately, the measures [on the agenda] are out of balance, meaning that the government has not presented a very long list of measures to streamline spending," the quoted source said.

At the beginning of the talks, Finance Minister Marcel Bolos (Liberal Party) had proposed an increase in the VAT rate from 19% to 22%, but also an increase in excise duty on fuel – measures rejected at the Social Democratic level, according to G4media.ro sources.

iulian@romania-insider.com

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