Romania's prime minister Marcel Ciolacu announced that the Government reached an agreement with the European Commission under the Excessive Deficit Procedure (EDP) for a prolonged seven-year fiscal consolidation calendar. 

However, he didn't provide any details, building suspense among investors and the general public amid broad expectations for tax rate hikes as soon as next year.

Although the ruling coalition avoided providing details, and will probably keep the plan secret until after they get another term in office in December, basic elements of the consolidation plans surfaced. Thus, the general government budget deficit will decrease from an estimated 8%-of-GDP value this year (cash terms) to 2.4% of GDP at the end of the seven-year consolidation cycle in 2031.

"What is essential is that the Commission's experts agreed that Romania needs seven years to make massive investments in the economy over the period. Therefore, investments will increase in the coming years and we will continue to invest massively in the economy and in infrastructure," PM Marcel Ciolacu wrote on Facebook.

He announced "a major investment project that connects large urban centers through modern railway transport."

(Photo: Vlad Ispas/ Dreamstime)

iulian@romania-insider.com