Tuesday, February 9, 2010

EU gives Romania an extra year to rein in deficit

08 February 2010

(BRUSSELS) - The European Commission on Monday gave Romania an extra year, till 2012, to bring its swollen public deficit back to the EU's limit of three percent of GDP, due to the gravity of the economic crisis.

"Romania has made a serious effort to limit the deterioration of its budget deficit and to preserve macro-economic stability during the past year," said the EU's Economic and Monetary Affairs Commissioner JoaquĆ­n Almunia.

"The worsening of the economic situation since the initial recommendations were made justifies extending the deadline by one year," he added in a statement.

Last July EU nations opened a an excessive deficit procedure against Romania, due to its enlarged budget deficit and recommended that it be brought within the acceptable range by 2011.

However Romania, like the rest of Europe, experienced a recession estimated at around seven percent last year, against the four percent forecast.

The general government deficit in 2009 is now thought to have reached 7.8 percent of gross domestic product (GDP).

The pushing back of the deficit deadline is the second bit of good news for the country in recent weeks.

The International Monetary Fund and European Union announced late last month that they will resume crisis aid to Romania, after the crisis-hit country passed an austerity budget.

The IMF will unblock 2.3 billion euros this month while the EU will unlock one billion euros (1.4 billion dollars).

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