EC on Romania's Convergence Programme: It doesn't detail the consolidation measures to be taken in 2011 and 2012 sufficiently

The convergence programme Romania sent to the European Commission has been approved this week in Brussels, alongside the projects of the other member states. European Commissioner for Economic and Monetary Business Olli Rehn declared on Wednesday, March 24, that the member states were „postponing” the most important fiscal consolidation efforts for the years to come and do not specify what are the exact measures they will adopt on medium-term, meaning for the next two years.

The commission has also said that Romania’s programme does not detail sufficiently the consolidation measures which are to be taken in 2011 and 2012, although it is expected that on the medium-term budget setup 2011-2013 to feature more information.

„All member states, except for Great Britain, seem to be ready to take into account the deadlines imposed by the EU to reduce budget deficit, but not all cases offer detailed measures. Most countries plan a more optimistic macro-economic approach that the European Commission”, Olli Rehn explained.

Each year the member states submit convergence programmes (the non-euro zone) and stability programmes (the euro zone). Romania’s Government has recently sent its Convergence Programme to the European Commission. The document was approved a national level on Tuesday, March 23.

Olli Rehn declared that the plans generally correspond to the agreed principles, but entail risks because of some over-optimistic macroeconomic hypothesis and the lack of medium-term fiscal consolidation clear measures. „I appeal to the member states to brace themselves for less ambitious growth scenarios and to clearly state the fiscal consolidation measures that they intend to enforce.”

Other statements made by the European Commissioner:

• Most member states hope to reach the GDP growth level from before the crisis on short-term, meaning in several years, which is unrealistic, unfortunately. Sadly, the potential growth has been negatively affected on long term.

• The EC appeals to the member states to adopt additional measures for fiscal consolidation in the case where the economic growth will be lower than projected by their programmes.

• In our opinion, Great Britain’s Convergence Programme is not sufficiently ambitious to bring the public finance to a medium-term durable evolution. In fact, what makes Great Britain stand out is that it is the only country that does not seem to think about respecting the Council’s recommendations of reducing the deficit below the 3% until 2014-2015. I’m looking forward to study this country’s budget project, which is being published today.