The European Commission sent Romania a notification requesting the country to curb its budget deficit, or else part of the cohesion funds would be suspended, liberal (PNL) minister of finance Marcel Bolos told his party’s leadership on July 3.

“We received a document from the Commission on Friday [June 30] recommending us to cut the [budgetary] deficit, otherwise [the Commission] suspends the European funds,” Bolos reportedly said, according to Digi24.

Romania has been under the Excessive Deficit Procedure since before the Covid-19 crisis [when the budgetary regulations were temporarily suspended], and it is unlikely to meet the 4.4% of GDP deficit this year after the gap exceeded 2.3% of GDP in January-May.

Liberal finance minister Bolos, with no particular expertise in the ministry but in line with the basic economic theory, is an advocate of eliminating all exceptions and loopholes in the fiscal system – a step recommended by all IFIs towards fiscal consolidation, as well.

“The deficit is wide, we can’t keep it under control without eliminating the loopholes,” Minister Bolos reportedly told PNL leadership on July 3. He previously expressed concerns with the wide January-May deficit.

Among the first exceptions envisaged by minister Bolos, there were the allowances extended to employees in IT, construction, food processing and agriculture. Neither the Liberal Party (PNL) nor Social Democrats (PSD) agree, however, with this scenario proposed by Bolos as a first step for balancing the public budget.

The 2023 budget planning was drafted by Bolos’s predecessor, Social Democrat (PSD) minister Adrian Caciu and the planned revenues proved to be overly optimistic, which complicates the fiscal consolidation that the Liberals must achieve.

iulian@romania-insider.com

(Photo source: Gov.ro)