Based on the European Commission's 2020 autumn forecast and the analysis of recent macroeconomic and budgetary developments, Romania is unlikely to make the adjustments that would be necessary to ensure that the excessive deficit identified in the April Recommendation is corrected in the foreseeable future, the EC concluded in its November 18 communication on the fiscal situation in Romania.

Even if they manage to reverse the 40% pension hike and the doubling of child allowances, the Romanian authorities will still need to consider substantial structural actions on both the revenue and expenditure sides to set the deficit on a declining path and prevent a steep increase in the debt-to-GDP ratio, the EC says.

Due to the current high uncertainty, fiscal sustainability risks will be reassessed in spring 2021, the Commission announced.

The EC placed Romania under the excessive deficit procedure (EDP) in April 2020 due to the Treaty deficit threshold breach in 2019.

In light of the continued high uncertainty due to the coronavirus pandemic, the Commission considers that a decision on further steps in Romania's excessive deficit procedure should be postponed.

It will reassess Romania's budgetary situation in the spring of 2021.

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andrei@romania-insider.com