Romania sent 2015-2018 Convergence Programme to EC

Friday, May 1, 2015 Share

Romania sent the 2015-2018 Convergence Programme to European Commission (EC) on Thursday, in which it maintains the engagement to adopt euro currency on January1, 2019, says a press release of the Finance Ministry.

The programme also presents the implications of the Fiscal Code bill in parliamentary debate. The prognosis of economic growth in conditions created by some fiscal measures estimate an additional GDP increase of 0.5-0.8%.

“The effects of implementing fiscal measures will be seen at social level. Thus the additional economic growth will generate, on one hand, an increase of people’s incomes according to the behaviour of economic units.

Romania’s government preserves its engagement made in the previous Convergence Programme to adopt euro in 2019,”the press release shows.

According to the Finance Ministry, Romania had in 2014 a structural deficit of the General Consolidated Budget of 0.1% of GDP, corresponding to provisions of the Treaty on stability, coordination and governance in the economic and monetary union of being included in medium term budget targets.

“The continuation of the reform process especially that of fiscal consolidation, based on the preventive type financing accord concluded with EU, IMF and World Bank confers the coherence of macroeconomic and financial policies, contributing to the consolidation of the investors’ confidence and maintaining macroeconomic and fiscal stability,” the Ministry shows.

According to the document, the specific target of budget policies is maintaining the budget deficit at planned targets of 1.45% of GDP in 2015, which includes and adjustment of 0.25% of GDP to co-finance projects from European funds and a deficit of 1.2% of GDP for 2016-2018.

“Romania has registered considerable progress in reducing macroeconomic unbalances and the recovery of a fiscal and financial manoeuvre area, which together with monetary policies and structural reforms implemented have contributed to maintaining macroeconomic and financial stability, with positive results in economic evolution,” the mentioned document shows.

In 2014 GDP grew in Romania by 2.8% being the fourth year of growth, which consolidates the tendency to recover from the economic and financial crisis which affected the country in 2009 and 2010.

“The 2014 increase was due mainly to the positive contribution of domestic demand. The main growth factor, private consumption, was backed by a strong increase of salaries and interest rates which reached record minimum levels,” the Finance Ministry says.

Over 2012-2014 the budget policy characterised by a prudent management of public expenses and the significant improvement of the management of public debt, important progress was registered for the reduction of risks. In 2013 Romania got out of the excessive deficit procedure.

The budget deficit calculated according to European methodology, dropped by 3.8% over 2011-2014, from 5.3% in 2011 to 1.5% of GDP in 2014, when economic growth was relatively modest compared to growth rates before the crisis, a fact which confirms the continuation of the process of fiscal consolidation and inclusion in established parameters, as a result of a prudent, sustainable budget policy.

Moreover, the budget deficit for 2014 represents 1.5% of GDP, under the average budget deficit for the euro zone of 2.4% of GDP and of 2.9% of GDP for EU, being the third country with the lowest deficit.