The Recommendation on the Excessive Deficit Procedure in the case of Romania was adopted on Friday at the Meeting of the Economic and Financial Affairs Council (ECOFIN), in Luxembourg, and our country's commitment is to return to a budget deficit up to 3% of GDP by 2024, according to a press release from the Ministry of Finance.
"Minister of Finance Alexandru Nazare participated in the meeting of the Economic and Financial Affairs Council (ECOFIN), held on June 17-18, in Luxembourg. The agenda of the ECOFIN meeting also included items related to the European Semester and the implementation of the Stability and Growth Pact. Increase, in this sense being adopted the Recommendation on the Excessive Deficit Procedure in the case of Romania, which confirms the commitment of our country to return to a budget deficit of maximum 3% of GDP, by 2024", reads the Ministry of Finance's release.
According to the quoted source, in the presentation, the European officials underlined that the excessive deficit procedure was triggered as a result of the expansionary policies and the balance registered in 2019, and the recommendation presents the updated calendar of correction of the excessive budget deficit, also ensuring the necessary fiscal space. supporting investments and achieving economic growth objectives, being in line with the national targets set in the Convergence Program presented by Romania.
In 2021, the Romanian Government has taken the necessary measures to achieve the set targets. Economic growth for 2021 is substantial, and in the medium term it will be supported by the Structural Funds and those in the Recovery and Resilience Facility, the European Commissioner for Economy, Paolo Gentiloni said at the meeting.
In his turn, the Romanian Minister of Finance specified in his intervention that the recommendation formulated by the Commission and adopted on Friday by the Council foresees a calendar of gradual reduction of the budget deficit until 2024, in the conditions where a too fast correction. "For 2021, both the economic growth forecast and the forecast deficit are similar, which indicates the European Commission's confidence in the measures adopted by the Romanian Government," Alexandru Nazare said.
Romania presents to the European Commission half-yearly reports on the effective actions implemented, starting with 2017, when the procedure of significant deviation for our country was initiated.
The significant adjustment of the European Commission's fiscal forecasts for 2021, from 11.3% of GDP (ESA deficit) in the autumn forecast, to 8% of GDP (ESA deficit) in the Recommendation, is mainly due to the measures adopted by the Government in the first months of 2021, in order to reverse the expansionary fiscal policies of 2016-2019.
According to the recommendation adopted by the European Council, Romania should reach a general government deficit target of 8% of GDP in 2021, 6.2% of GDP in 2022, 4.4% of GDP in 2023 and 2.9% of GDP in 2024, which is in line with the objectives of the Romanian government.
The European Council states that it has taken into account the changes in Romania's fiscal situation, the budgetary developments in 2020 and the new budgetary strategy adopted and calls for reforms, including in the management of public finances.
The recommendation adopted on Friday takes into account recent developments and sets a new deadline for correcting Romania's excessive deficit in 2024. Romania is expected to present a report to the European Council by October 15, 2021 on the consolidation strategy for achieving the targets set in recommendation.