Tuesday, March 15, 2011

Romanian President Wants Constitutional Limit on Budget Deficit

Romanian President Traian Basescu said he wants to amend the constitution to limit the budget deficit at the European Union’s ceiling of 3 percent of economic output before the Balkan nation holds an election next year.

Romania is facing political irresponsibility: before a general election, politicians are raising wages and pensions, exceeding limits and then the future government will have to borrow more to pay off its debts to fulfil electoral promises,” he said on state television yesterday. “The budget-deficit cap would discipline the political class.”

Romania, the 27-member EU’s second-poorest country after Bulgaria, is struggling to recover from its worst recession on record. The government increased investment spending in the first half of the year to boost the economy after imposing austerity measures to qualify for payments from a bailout.

The country is seeking a new precautionary loan agreement to safeguard against potential effects from Europe’s sovereign- debt crisis while pledging to narrow the budget deficit to 4.4 percent of gross domestic product this year and 3 percent in 2012.

A parliamentary committee will work over the summer in Bucharest on a draft of the constitutional changes, Basescu said. No date for parliamentary elections in 2012 has been set.

“The estimate is for the new Constitution to take effect once the current lawmakers finish their mandate,” he said in the television interview.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: Alan Crosby at acrosby1@bloomberg.net

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