November 29 (SeeNews) - Romania will allocate 2% of gross domestic product (GDP) to defence next year even if the effort may take budget deficit above the ceiling of 3% of GDP agreed with the European Commission, president Klaus Iohannis said on Tuesday.
"Romania will respect its commitment of allocating 2% of GDP to defence. We will see what the deficit will be in the budget draft for next year and the draft will probably be presented by the next government. Should the deficit reach the critical 3%, the government will certainly know what and with whom to negotiate to promote its draft budget," Iohannis said in a statement following a quarterly meeting of Romania's Supreme National Defence council.
According to the Medium Term Budgetary Objective (MTO) agreed at the end of 2014 with the International Monetary Fund (IMF) and the European Commission, Romania must not surpass a structural deficit target of 3% of GDP. Romania's consolidated budget showed a deficit equivalent to 0.17% of the projected 2016 GDP in the first 10 months, finance ministry data showed on Monday.
The country targets a consolidated budget gap of 2.95% of GDP on a cash basis in 2016. The budget for 2017 will be made by Romania's new government, which will be formed after December 11 regular parliamentary elections.
The 2% defence spending target was established at NATO's summit in Wales, UK in 2014. Member states pledged to aim at spending 2% of their respective GDP on defence by 2024. The allies which were already meeting the NATO spending target pledged to aim to continue to do so. The states whose proportion of GDP spent on defence was below this level also pledged to halt any decline in defence expenditure and to increase spending in real terms as GDP grows.
US Ambassador in Bucharest, Hans Klemm, recently urged Romania to allocate 2% of GDP to defence, following calls in the same direction made by US president-elect Donald Trump during his election campaign. Trump has said that NATO member states, which don't spend at least 2% of their GDP on defence, should not be protected anymore by the US military.
In order to reach the 2% target, Romania must add 4.9 billion lei ($1.14 billion/1.08 billion euro) to the defense ministry's budget for next year. Currently, Romania's defense spending relative to GDP stands at 1.48%.
Klaus Iohannis said he doesn't expect any change in Romania's relationships with NATO and the US following the elections.
"I am convinced that the strategic partnership will go on well. Apart from that, our foreign affairs ministry and representatives in Washington have received clear instructions to maintain contact with the transition team and it is no secret that Romania has multiple and very good contacts with the Republican side of the United States of America," Iohannis said.
Romania joined the North Atlantic Treaty Organisation (NATO) in 2004, along with Bulgaria, Estonia, Latvia, Lithuania, Slovakia and Slovenia.
In May, the Aegis Ashore NATO ballistic missile defence base at Deveselu, in southwestern Romania, became operational.
(1 euro=4.5162 lei)