BUCHAREST (Romania), February 26 (SeeNews) - The European Commission (EC) said on Wednesday that Romania needs to correct fiscal and external deficits and implement structural reforms in order to ensure steady economic growth.

In the absence of lasting reform efforts, growing fiscal and current account deficits are putting the sustainability of Romania’s economic growth at risk, the Commission said in its 2020 country-specific recommendations on Romania, which are part of the European Semester Winter 2020 Package.

Strong domestic demand, stimulated by tax cuts and large wage increases, has been the economy’s growth engine in recent years, but the consumption-led growth model has pushed the country’s current account and public finances into rising deficits, the report showed.

In addition, adverse demographic developments have led to significant labour and skill shortages, limiting the country’s growth potential. Despite an average growth of around 5% in the past three years, inequality is increasing and poverty remains high, while regional disparities are deepening, the EC warned.

Overall, Romania has made limited progress in addressing the 2019 country-specific recommendations, according to the Commission.

While there has been substantial progress in safeguarding financial stability and the robustness of the banking sector, there has been some progress in ensuring the long-term viability of the second pension pillar and in implementing the national public procurement strategy.

Romania made limited progress in its efforts to strengthen tax compliance and collection, to improve education quality and social dialogue, to increase the coverage and quality of social services, social dialogue, improve access and cost-efficiency of healthcare.

According to the Commission, Romania made no progress in the following areas: ensuring that the national fiscal framework is implemented, ensuring the sustainability of the public pension system, improving skills by increasing the labour market relevance of vocational education and training and higher education, completing the minimum inclusion income reform, improving the predictability of decision makin and improving the corporate governance of stateowned enterprises.

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