BREAKING Finance Minister Marcel Bolos has told liberals that a letter from the European Commission warns that European funds will be cut if Romania does not reduce its budget deficit – Sources

Marcel Bolos, the Minister of Finance in the Ciolacu government, told his colleagues in the PNL leadership on Monday that he received a letter from the European Commission last Friday demanding a decrease in the budget deficit, or else part of the European cohesion funds will be suspended, liberal sources told G4Media. Bolos did not respond to G4Media’s calls and messages by the time the article was published.

Romania is under the excessive deficit procedure, a mechanism by which it takes responsibility for reducing its budget deficit before the EU. One of the instruments by which the EU can penalize Romania’s failure to meet its commitments is the freezing of European cohesion funds (not the PNRR).

The budget deficit, i.e. the difference between revenue and expenditure, rose to 36.91 billion lei in the first five months of the year, according to Economedia. As a percentage of GDP, the deficit reached 2.32%, up both from the first four months of the year when it stood at 1.72% of GDP (27.35 billion lei) and from the first five months of 2022, when it stood at 1.57% of GDP (20.9 billion lei).

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Romania entered the excessive deficit procedure in 2020 after Liviu Dragnea controlled PSD governments and spent far above revenues. Under this procedure, Romania must return to a deficit below 3% of GDP.

The major problem is that although Romania has assumed a budget deficit of 4.4 % of GDP for this year, the data for the first months show a black reality.

Lucian Heiuș, the former head of ANAF, announced in May, at the time of his resignation, a shortfall of 8.9 billion lei in state budget revenue. This is a difference between the actual collections for the first five months and the collections planned by the Ministry of Finance for the same period.

Romania was already in an excessive deficit procedure in 2009, at the start of the global financial crisis.

It is worth noting that the government is currently under constant social pressure for wage and pension increases, as was the case with the education and health strikes.

In addition, four elections are scheduled for 2024, and the experience of recent years shows that in election years the parties in power increase state spending in order to secure the goodwill of large sections of the electorate.