EU to spare Romania of the infringement procedure for budget deficit, Romanian Economy minister saysPublish date: 14-02-2008
Romania will not be target to the so-called Excessive Deficit Procedure (EDP), Economy and Finance Minister Varujan Vosganian said at the beginning of a government meeting today where he presented the results of talks he had with the European Commission's representatives.
Vosganian had previously underlined at the meeting with the EU commissioner for economy, Joaquin Almunia, the government's engagement to reduce the level of the budget deficit this year compared to 2007.
Prime Minister Calin Popescu Tariceanu also underlined Romania is in no danger to exceed the 3 percent budget deficit threshold established through the Maastricht treaty.
Finance ministers with the European Union scolded Romania for allowing the budget deficit to widen despite the healthy economic growth and deem Romania has slim chances to balance the budget by 2011.
The treaty establishing the European Community obliges member states to avoid excessive budgetary deficits by respecting two criteria: a deficit to GDP ratio and a debt to GDP ratio not exceeding a reference value of 3 percent and 60 percent respectively, as defined in the Protocol on the EDP annexed to the Treaty.
According to the European Commission's spring forecast in May last year, the deficit of Romania's general consolidated budget was to reach 3.2 percent of the country's GDP in 2007, therefore exceeding both the government's forecast and the threshold imposed under the Maastricht criteria.
In spite of higher revenues the previous year, after a higher-than-expected economic growth, the general consolidated budget deficit stood at 1.9 percent of the GDP from 1.4 percent in 2005, the report mentioned, mainly blaming the wage increase in the public field.
Vosganian said at the time there is no need to initiate the EDP procedure considering revenues to the public budget caught up in April and also due to the country's economic growth which will exceed forecasts by 0.5 percentage points to 7 percent.
According to the European Commission, sanctions first take the form of a non-interest-bearing deposit with the Commission. The amount of this deposit comprises a fixed component equal to 0.2 percent of GDP and a variable component linked to the size of the deficit. Each following year the Council may decide to intensify the sanctions by requiring an additional deposit, though the annual amount of deposits may not exceed the upper limit of 0.5 percent of GDP.
A deposit is as a rule converted into a fine if, in the view of the Council, the excessive deficit has not been corrected after two years.
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