The European Union will likely grant the Romanian government a grace period to implement measures aimed at reducing the rising budget deficit before considering potential punitive actions against the Black Sea nation, according to Bloomberg.
The European Commission will give Bucharest time before taking steps to suspend EU funds, in a report on Romania’s progress under the so-called excessive deficit procedure, set to be published Wednesday, sources familiar with the closed-door discussions said.
The progress report will provide Romania a window to present concrete measures to reduce what has become the largest budget deficit among EU member states.
The nation of 19 million has struggled to manage fiscal consequences, facing its worst political crisis in six months, Bloomberg notes. This turmoil—fueled by the shocking November win of a far-right candidate, Kremlin interference allegations, and canceled presidential elections—culminated last month in a centrist candidate’s victory in a rerun for the country’s top office.
President Nicușor Dan has stated that addressing Romania’s budget is his number one priority as head of state. “No other country has had deficits this large every year since the pandemic,” said Ștefan Nanu, head of the Romanian State Treasury, at a conference in Bucharest on Tuesday. “We must be consistent in closing the gap, and we must achieve it. That is what the Commission and rating agencies expect.”
The Commission’s deficit procedure is a stepwise process requiring member states’ approval before implementation. EU finance ministers will share their opinion on June 20.
Nicușor Dan is overseeing coalition talks among a handful of pro-European parties holding a parliamentary majority. Upon taking office last month, he acknowledged that Romania will not meet the goal of reducing its deficit to 7% of GDP this year. Any deviation from Romania’s budget commitments must be approved by the Commission.
Brussels is already reviewing the country’s failure to submit a seven-year deficit reduction plan by the April deadline, just before the first round of presidential elections on May 4, where far-right candidate George Simion scored a decisive win, triggering a massive sell-off of Romanian assets. Nicușor Dan’s victory brought some calm, the source adds.
“I hope we have a fair approach from the European Commission and get a grace period of days or weeks to present a proposal of measures currently being discussed and worked on,” said Romanian Finance Minister Tanczos Barna on Monday.