The European Commission has made the announcement about the opening of an Excessive Deficit Procedure (EDP) for Romania, Interim Finance Minister and Prime Minister-designate Florin Citu stated on Wednesday, in a video message posted on Facebook, specifying that our country has a sustainable and credible plan to reduce the deficit.
“Transparency and professionalism. Today the European Commission has published three documents and has made an announcement, that you already knew, a piece of information you already had: the Excessive Deficit Procedure for Romania is about to start. It is a very good thing for you to know the truth about this piece of information from Romania’s Finance Minister. I have negotiated with the European Commission in the last three months and you should know that everything we have negotiated has been approved. Romania has a sustainable and credible plan to reduce the deficit, fully accepted by the European Commission which means that the experts of the European Commission trust this government. As promised, we are doing good things for Romania,” said Citu.
The European Commission published mid-February a report according to which Romania did not meet the deficit criterion defined in the Treaty and that opening an excessive deficit procedure is justified.
According to the Commission’s winter forecasts, Romania’s government deficit has reached 4 percent of GDP in 2019, being due to rise to 4.9 percent in 2020 and 6.9 percent in 2021. The deficit increase is mainly the result of the increase of pensions adopted in the summer of 2019, in particular a 40 percent increase of the pensions scheduled for September 2020, and a new recalculation of the pension scheduled for September 2021. In addition, in December 2019 and January 2020, the authorities have adopted further tax reductions and doubled children’s allowances.
In reference to the new Pension Law, the European Commission’s report underscores that due to the implementation timetable, this law will significantly increase public spending on pensions in a short period of time. The Pension Law “is the main factor of the expected rapid increase of the government deficit and of the risks to the fiscal sustainability,” the European Commission report shows.