European Commission: Romania's Deficit Is "Serious Concern"

DOW JONES NEWSWIRES

Romania's increasing budget deficit is a "serious concern" the European Commission said Wednesday in its latest review of European Union members' convergence programs.

"Romania needs to aim for more healthy budgetary targets to avoid breaching the rules of the Stability and Growth Pact and to contain the growing external deficit and inflationary pressures which pose a risk to macroeconomic and financial stability," said Economic and Monetary Affairs Commissioner Joaquin Almunia.

Romania's planned reduction of its budget deficit to just below 1% by 2011 is "left until the last year of the program period despite strong growth prospects, " the commission said.

Romania should pursue "substantially more demanding budgetary targets" starting this year, the commission said.

Romania's cyclically-adjusted budget deficit will stay at 3.6% of gross domestic product this year, improve only slightly in 2009 and come down to 2.8% of GDP in 2010, according to the new European Union member's own convergence plan.

Commission forecasts in November said the budget deficit would grow to 4.0% of GDP in 2009.