November 22 (SeeNews) - The European Commission (EC) said on Wednesday that Romania has failed to do enough to reduce its 2017 budget deficit and that the necessary annual adjustment needs to be at least 0.8% of the gross domestic product (GDP).
"On the back of developments since and following the lack of effective action by Romania to correct its significant deviation, the Commission now proposes a revised recommendation of an annual structural adjustment of at least 0.8% of GDP in 2018," the EC said in a fact sheet presenting recommendations for member states.
In June, the Council issued a recommendation for an annual structural adjustment of 0.5% of GDP to Romania under the Significant Deviation Procedure (SDP)
The Commission, however, established that the Romanian authorities have taken no effective action in response to the European Council's recommendation in June.
At the time, the EC warned Romania that it may not meet its budget deficit target and urged the government to take action to avoid the opening of an excessive deficit procedure.
The Commission proposed that the Council adopts a revised recommendation to Romania to correct its significant deviation from the adjustment path towards the medium-term budgetary objective.
At the beginning of November, the EC raised its projection for Romania’s economic expansion in 2017 to a real 5.7% from 4.3% forecast in May, but warned that the government's policy uncertainties could hamper growth. The EC also said that the general government headline deficit is projected to further deteriorate to 3.5% of GDP in 2017 from 3.0% in 2016, due to numerous fiscal easing measures.
Romania's consolidated budget deficit increased to 0.81% of the projected 2017 GDP in the nine months through September, from 0.49% a year earlier
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