EU Warns Romania That Deficits Keep It From Joining The Euro Zone

Romania's target for adopting the euro as its national currency is 2014. European Union officials however warn that this deadline may not be met, given the country's economic performance.

Romania's target for adopting the euro as its national currency is 2014. European Union officials however warn that this deadline may not be met, given the country's economic performance.

“Public spending and macroeconomic deficits should be reduced, or else Romania's adoption of the  euro may be in jeopardy,” said Nicolae Idu, the head of the EU Delegation in Bucharest.

“[The country] needs economic policies that will help it reach the macroeconomic targets enabling it to adopt the euro. The idea is that the fiscal policy should be more predictable and bring budget earnings that would lower the deficit under the 1% of the GDP mark,” added Idu.

The EU cannot reprimand Romania for going over the 3% of the GDP with its budget deficit, given that the country is not yet a member of the euro zone.

However, the EU Commissioner for Economic and Monetary Affairs Joaquin Almunia said the EU would take steps against Romania in compliance with the Stability Pact, if the Romanian authorities fail to act.

“We are worried by the figures presented by the Romanian authorities [...] Looking at the development of the budget, one can see that the deficit stayed very close to 3% of the GDP,” said Almunia.

To adopt the euro, Romania must comply with the convergence criteria adopted in Maastricht, which refer to the inflation rate, annual government deficit and government debt, joining the exchange-rate mechanism and the nominal long-term interest rate.

• Translated by Anca Păduraru