The Commission instructed Romania to follow a fiscal consolidation path in line with the Romanian Government’s public deficit targets of 3.6%-of-GDP in 2020, 3.4%-of-GDP in 2021 and 2.8%-of-GDP in 2022. Such performance is consistent with annual nominal increase in public spending of 8.2% in 2020 and 5.5% in each of the following two years.
Furthermore, the Commission wants Romania to come up with the fiscal consolidation strategy by September 25 this year.
The Commission estimated under the Winter Forecast that, unless corrective steps are taken, Romania’s public deficit will hit 6.1% of GDP in 2021.
The key issue is the 40% pension hike scheduled for this September – the hot potato in the hands of any political party governing before the elections.
The Liberal Government, which took office last November after overthrowing the Social Democrats, under the medium term fiscal strategy drafted along the 2020 budget planning, estimated that the country’s public deficit will return under the 3%-of-GDP threshold no sooner than 2023. Acting finance minister and prime minister designate Florin Citu has repeatedly confirmed this rather moderate fiscal consolidation strategy.
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