Romania will meet the European Union’s budget deficit target of 3 percent of GDP in 2017, the Ministry of Public Finances (MFP) said on Friday. This comes as after the recent Eurostat data revealed that Romania recorded a budget deficit of 3.2 percent in the first quarter.
“The 3.2 percent of GDP reported on Thursday by Eurostat was calculated on the seasonally adjusted ESA (European System of Accounts) standard, and in terms of GDP in the first quarter, the quarter in which GDP usually shows the lowest nominal value”, MFP explained in a press release.
In 2016 GDP in the first quarter was RON 146.4 billion, while the highest quarterly GDP was in the fourth quarter of RON 228.9 billion, MFP representatives said.
The government deficit of Romania in the first quarter of this year was three times higher than the EU average of 1.1 percent of GDP. Among the EU member states, only France had a higher deficit than Romania, of 3.3 percent of GDP.
MFP also said that Romania posted a 3.1 percent deficit in the first quarter of 2016 and the increase to 3.2 percent in the first quarter of 2017 is only marginal, which suggests that the country is on the track to meet the budget deficit target for the year.
However, National Bank of Romania (BNR) Board members remarked recently that, in the absence of compensation measures, keeping the budget deficit below 3 percent of GDP would pose greater problems in 2018.
At the same time, the European Commission expressed this spring its concern that Romania will go from registering the highest growth in the EU to racking up the biggest budget deficit. According to the Head of the EU executive’s representation in Romania Angela Cristea, although Romania has registered in 2016 the highest economic growth in Europe, at 4.9 percent, all EU official data draws attention to the risk that this year Romania will have the highest public deficit increase.
Not least, the International Monetary Fund (IMF) warned in May that Romania’s budget deficit is expected to increase to 3.7 percent of GDP this year and to 3.9 percent of GDP in 2018 due to the absence of additional fiscal measures.
Romania’s consolidated budget deficit increased to 0.27 percent of the projected GDP in the first five months of 2017, up from 0.10 percent of GDP a year earlier.
Romania targets a consolidated budget gap of 2.99 percent of GDP on a cash basis in 2017, just below the 3 percent ceiling of the EU. According to the Maastricht treaty signed in 1992, the ratio of the annual general government deficit relative to GDP at market prices must not exceed 3 percent at the end of the preceding fiscal year.