The European Union adopted, at the end of April, a modification of the rules of fiscal discipline applicable to all member states, which imposes, among other things, the obligation to maintain the budget deficit below 3% of the gross domestic product.
11 European states, including Romania, are in a position to be disciplined by the European Commission for exceeding the deficit above this ceiling. Currently, Romania is the only state to which the European correction mechanism applies. Although the euro zone states can be financially sanctioned, the EU has not applied any fine in the last 20 years to any western state, reports Newspapers.com.
Last year, the ranking of the top five EU countries, according to the budget deficit, included: Italy (7.4%), Hungary (6.7%), Romania (6.6%), France (5.5%) and Poland (5. 1%). At the moment, apart from the five states previously mentioned, six others have budget deficits that exceed the threshold considered acceptable by the EU: Malta, Slovakia, Belgium, the Czech Republic, Spain and Estonia. Of these, Belgium, France and Italy have declared that they do not intend to take measures to return to the level required by the European institutions in the coming years, which almost guarantees that they will be fined, writes Financial Times.
The commission will take a decision in June on the imposition of the excessive deficit procedure, as the prevention and correction mechanism is known. Among the sanctions that can be applied to states that do not comply with the recommendations are the change of the loan regime granted by the European Investment Bank and fines. For countries like Romania, the effects may be related to the loss of access to certain European funds. Once the excessive deficit procedure is opened, the expectation of the European institutions is for the member states to reduce net expenses by at least 0.5% of GDP, the EU Council recalls in a press release from April 29.
Currently, Romania is the only state for which the EU has an ongoing excessive deficit procedure. The measure was taken in the spring of 2020, and the Bucharest government has until the end of the current year to reduce the budget deficit. The first correction recommendations applied under the umbrella of this mechanism came in 2003, against France and Germany. Since then, the European institutions have found no less than 22 times that certain countries in the euro zone exceed the imposed threshold, according to an analysis carried out by two Dutch economists in 2019.
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