EC launches deficit procedure against Romania

BRUSSELS, Belgium

The European Commission (EC) decided on Wednesday (May 13th) to initiate a procedure against Romania for running up an excessive deficit, though the government blames the 2008 budget gap of 5.4% of GDP on expenses related to public employees’ salaries in the context of the global financial crisis.

According to the EC report, Romania undertook “a pro-cyclic budget policy between 2005 and 2008”, leading to the budget deficit’s increase from 1.2% of GDP in 2005 to 5.4% of GDP in 2008, despite an average real GDP growth of 6.5%.

In the same report, the EC acknowledges recent efforts by the government to address its macroeconomic imbalances, including fiscal consolidation measures in the 2009 budget adopted in February and amended in April.

The EC blames much of the deficit issues on generally weak budgetary planning and implementation by the former government.