"Romania needs to take the necessary measures to ensure that the nominal growth rate of net primary government expenditure does not exceed 4.4% in 2020, corresponding to an annual structural adjustment of 1.0% of GDP, thereby putting the Member State on an appropriate adjustment path toward the medium-term budgetary objective," the Commission said in its 2018 country-specific recommendations on Romania, a part of the European Semester Autumn 2019 Package unveiled on Wednesday.
According to the Commission, budgetary consolidation measures should secure Romania a lasting improvement in the general government structural balance in a growth-friendly manner.
The Commission asked Romania to report to the Council by April 15, 2020 on action taken in response to this recommendation.
"The report should provide sufficiently specified and credibly announced measures, including the budgetary impact of each of them, with a view to complying with the required adjustment path, as well as updated and detailed budgetary projections for 2020," the Commission added.
In order to correct the cumulated deviations and to bring Romania back on an appropriate adjustment path following past slippages, an additional effort should complement the annual structural adjustment of 0.75% of GDP for 2020 recommended by the Council in June 2019, the Commission stressed.
"An additional effort of 0.25% of GDP seems appropriate given the magnitude of the cumulated deviations from the recommended adjustment path toward the medium term objective. It will accelerate the adjustment back towards the medium-term budgetary objective without putting economic growth at risk," the Commission said.
Romania's new finance minister, Liberal Florin Citu, said last week that the budget gap could widen to 4% of gross domestic product this year and accused his Social Democrat predecessor Eugen Teodorovici of deliberately faking numbers.
"The budget deficit widened to 2.84% [of GDP] in January-October and is estimated at over 4.0% at the end of the year. We have about 4 billion lei left in the reserve fund but we will pay all our bills," Citu said in a televised statement, presenting his initial conclusions after analyzing the state of public finances.
Following his statements, the leu has been weakening against the euro, hitting a new historic low of 4.7776 lei per euro, down 0.04% compared to Tuesday.
The PNL government took office earlier this month after the Social Democrat cabinet led by Viorica Dancila lost a no-confidence vote on October 10. The vote was requested by PNL who accused the Dancila government of incompetence.
The country's consolidated budget was in deficit equivalent to 2.6% of the projected 2019 gross domestic product (GDP) in the nine months through September, compared to a gap of 1.77% of GDP a year earlier, the latest finance ministry data shows.
