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EC warns Romania and 10 other states they face high risks for public finance sustainability
The European Commission warns on Monday, that 11 European states, Romania included, are facing high risks of public finance sustainability because their debt level will be high even in the next 10 years, Reuters informs. In a report on fiscal sustainability, the European Commission says that France, Italy, Belgium, Ireland, Spain, Croatia, Portugal, Romania, Slovenia, Finland and Great Britain are facing high risks. The report does not refer to Greece and Cyprus which are still undergoing financial assistance programs.
Data are based on macroeconomic estimates published by EC in November 2015.
The report does not include recommendations and later on EC will present recommendations specific to every country.
States with the best performances of fiscal sustainability are Denmark, Germany, Estonia and Latvia.
In Romania’s case, the report shows that on a long term, the country does not face significant fiscal pressure risks, although some variables (like position of net international investments) might indicate possible short term difficulties.
On average term, in normal conditions and without changes of fiscal policy, Romania’s public debt may grow to over 60% of GDP in 2026. On the other hand, EC estimates that Romania’s debt could drop to about 35% of GDP in 2026 if the structural balance is in line with MTO and the country observes provisions of the Stability and Growth Pact.
Moreover long term risks appear, coming from the unfavourable initial budget position to which public debts concerning the ageing population are added.