Commissie beoordeelt convergentieprogramma's Roemenië en Slowakije (en)

Having examined the updated convergence programme [1] of Slovakia, the European Commission finds that its planned budgetary consolidation is consistent with a correction of the excessive deficit in 2007. But it should speed up consolidation thereafter so as to create a safe budgetary margin more quickly and to counter any possible inflationary pressures. Romania's convergence programme projects a continuation of high deficits despite strong growth. This creates the risk of an excessive deficit and is not in line with prudent fiscal policy.

"Both Romania and Slovakia have been experiencing a period of strong economic growth. The increasing deficit of Romania since it joined the EU and its volatility are a matter of serious concern. 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. Slovakia's planned budgetary consolidation is consistent with a correction of the excessive deficit in 2007. But looking beyond the correction of the excessive deficit, faster progress towards the medium-term objective is advised, in particular to contain possible inflationary pressures", said Economic and Monetary Affairs Commissioner Joaquín Almunia.

Today the Commission has assessed the updated Convergence Programmes of Romania and Slovakia. It also assessed the Stability Programmes of France and Italy (see IP/08/106). This follows the first group of programmes examined on 23 January. All are expected to be then discussed at the 12 February EU Finance Ministers Council. The remaining programmes will be assessed by the Commission in February.

ROMANIA

Romania submitted a new update of its convergence programme on 5 December 2007, covering the period 2007-2010.

The budgetary strategy outlined in the programme is not in line with the prudent fiscal policy necessary to contain the growing external deficit and inflationary pressures which put the convergence process at risk. The programme envisages a continuation of high deficits, entailing the risk of an excessive deficit. (See tables attached for growth and budgetary projections for Romania and Slovakia.) Progress towards Romania's medium-term objective (MTO) of a deficit just below 1% by 2011 is clearly insufficient and is left until the last year of the programme period despite strong growth prospects. In view of the risks to the budgetary targets and the significant adjustment that would be necessary after the programme period, the MTO is unlikely to be achieved by 2011 as planned.

The long-term sustainability [2] of Romania's public finances has not yet been assessed as calculations on age-related cost projections are still under way. The national debt was 12.4% in 2006, well below the 60% reference value set in the EU Treaty, but it is increasing.

In view of the Commission assessment and the need to ensure sustainable convergence, Romania is invited to: (i) significantly strengthen the pace of adjustment towards the MTO by aiming for substantially more demanding budgetary targets in 2008 and subsequent years in order to contain the risk of an excessive deficit, foster macroeconomic stability and rein in widening external imbalances and address the risks to the long-term sustainability of public finances; (ii) restrain the envisaged high increase in public spending, review its expenditure composition so as to enhance the economy's growth potential and improve the planning and execution of expenditure within a binding medium-term framework; (iii) adopt policies to contain inflationary pressures, complementing the recommended tighter fiscal stance, with appropriate public wage policy and further structural reforms.

SLOVAKIA

Slovakia submitted a new update of its convergence programme on 29 November 2007, covering the period 2007-2010.

The programme is consistent with a correction of the excessive deficit by 2007. Progress towards Slovakia's medium-term objective of a deficit just below 1% slows down, however, in 2008, and the MTO is planned to be reached only at the end of the programme period despite strong growth outcomes and prospects.

Slovakia is advised to stand ready to adopt a tighter fiscal stance, in particular in view of possible inflationary pressures after the disinflationary effect of past exchange rate appreciation fades out.

As regards the long-term sustainability of public finances, Slovakia appears to be at medium risk.

In view of the Commission assessment and the recommendation under Article 104(7) of 5 July 2004 and also given the need to ensure sustainable convergence and smooth participation in ERM II, Slovakia is invited to: (i) exploit the strong growth conditions to strengthen the pace of structural adjustment towards the MTO in 2008 and strictly implement the envisaged structural consolidation thereafter, backed up, if necessary, by additional measures as well as more binding medium-term expenditure ceilings and (ii) introduce further structural reforms to improve the labour market performance and stand ready to adopt a tighter fiscal stance, in particular in order to contain possible inflationary pressures, especially after the disinflationary effect of past substantial exchange rate appreciation fades out.

The country-specific Commission recommendations for a Council opinion on each programme are available at:

http://ec.europa.eu/economy_finance/sg_pact_fiscal_policy/sg_programmes9147_en.htm

[1] According to Council Regulation (EC) No 1466/97 on the strengthening of budgetary surveillance and the surveillance and coordination of economic policies (as amended by Regulation No 1055/2005), Member States must submit updated macroeconomic and budgetary projections every year. Such updates are called stability programmes in the case of countries that have adopted the euro, and convergence programmes in the case of those that have not yet done so. This regulation is also referred to as the 'preventive arm' of the Stability and Growth Pact.

[2] The analysis of long-term sustainability of public finances takes into account the current level of debt, the current budget deficit/surplus and the expected costs arising from an ageing population, assuming no policy changes. For Romania, a comparable and robust assessment is not possible since long-term projections of age-related expenditures are not available.