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2019/11/11 / Erste Group Research

Romania Special | Fiscal stance is most pressing issue


In the absence of corrective measures, Romania’s budget deficit will soar to levels that could put Romania under the Excessive Deficit Procedure next year, trigger a negative response from rating agencies and lead to an increase in borrowing costs.

Years of loose fiscal and income policies led to a widening of the budget and current account deficit and gave Romania a difficult task of consolidating its public finances.

Romania is already under the Significant Deviation Procedure, with the European Commission recommending fiscal adjustment. The EC could formally trigger the Excessive Deficit Procedure already in 2020 if the budget deficit exceeds the 3% threshold by a significant margin in 2019 and the government fails to present any credible fiscal consolidation plan.

European Commission sees budget deficit in Romania at 3.6% and 4.4% of GDP in 2019 and 2020, respectively.

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General information

AuthorErste Group Research
Date2019/11/11
Languageen
Product nameCEE Economies Special Report
Topic in focusMacro/ Fixed income
Economy in focusRomania
Currency in focusRomanian Leu
Sector in focus-
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