EC recommends romania to avoid implementing permanent measures endangering fiscal sustainability

The European Commission has recommended Romania to pursue fiscal policies in line with the Council's recommendation of 3 April 2020 that Romania should put an end to the present excessive deficit situation by 2022 at the latest, according to the recommendations in the European Semester Spring package released on Wednesday.

In early April, the European Council assessed that Romania should reach a general government deficit target of 3.6% of GDP in 2020, 3.4% of GDP in 2021 and 2.8% of GDP in 2022. which corresponds to an annual structural adjustment of 0.5% of GDP in 2020, 0.8% of GDP in 2021 and 0.8% of GDP in 2022.

On Wednesday, the EC said Romania should be taking all necessary measures to effectively address the pandemic, sustain the economy and support the ensuing recovery. Avoid the implementation of permanent measures that would endanger fiscal sustainability. Strengthen the resilience of the health system, including in the areas of health workers and medical products, and improve access to health services.

At the same time, Romania should provide adequate income replacement and extend social protection measures and access to essential services for all, and mitigate the employment impact of the crisis by developing flexible working arrangements and activation measures, while strengthening skills and digital learning and ensure equal access to education.

The EC also recommends the country to ensure liquidity support to the economy benefitting businesses and households, particularly small and medium-sized enterprises and the self-employed; front-load mature public investment projects and promote private investment to foster the economic recovery, while also focusing investment on the green and digital transition, in particular on sustainable transport, digital service infrastructure, clean and efficient production and use of energy and environmental infrastructure, including in the coal regions.

Romania should also improve the quality and effectiveness of public administration and the predictability of decision-making, including through an adequate involvement of social partners.

Overall, EC says, the EU member states should focus on investing in public health and protecting jobs and companies, and strike a balance between achieving fiscal sustainability while also stimulating investment moving forward.

"The Coronavirus has hit us like an asteroid and left a crater-shaped hole in the European economy. This Spring semester package has been recast and streamlined to provide guidance to our Member States as they navigate their way through the storm. For this immediate phase, our focus is on investing in public health and protecting jobs and companies. As we shift to the recovery, the Semester will be essential in providing a coordinated approach to put our economies back on the track to sustainable and inclusive growth - no one should be left behind. We also need reforms to improve productivity and the business environment. Once conditions allow, we will need to strike a balance between achieving fiscal sustainability while also stimulating investment," EC Vice-President Valdis Dombrovskis is quoted as saying.

EC also calls on the European Council to adopt the country-specific recommendations and on member states to implement them fully and in a timely manner.