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EU urges Romania to narrow fiscal deficit

EU urges Romania to narrow fiscal deficit

BUCHAREST (Romania), May 20 (SeeNews) - The European Commission said on Wednesday that Romania needs to pursue fiscal policies aimed at narrowing the fiscal and external deficits, while still implementing all necessary measures to effectively address the pandemic and sustain the economy.

"The long-term sustainability of Romania’s public finances was already at risk prior to the Covid-19 outbreak, as a result of high budget deficits and the projected significant rise in ageing costs, in particular pensions," the Commission said in its 2020 country-specific recommendations on Romania, which are part of the European Semester Spring 2020 Package.

The Commission's assessment showed that fiscal sustainability risks are further heightened by the impact of the pandemic on economic activity and the fiscal effort required to cushion it.

According to the Commission, prior fiscal policy decisions have left Romania with small fiscal buffers to deal with the outcome of the coronavirus outbreak and the country should avoid the implementation of permanent measures that would endanger fiscal sustainability and strengthen the resilience of the health system.

Another recommendation for Romania is to provide adequate income replacement and extend social protection measures and access to essential services for all and to mitigate the employment impact of the crisis by developing flexible working arrangements and activation measures.

Romania should also ensure liquidity support to the economy benefiting businesses and households, particularly small and medium-sized enterprises and the self-employed and front-load mature public investment projects and promote private investment to foster the economic recovery.

Investments should focus 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.

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

(1 euro =4.8421 lei)