EU warns Romania of dangers in running up public deficit

(BRUSSELS) - The European Commission warned Romania Wednesday that its mounting public deficit was now of "serious concern" and urged authorities there to adopt tighter budget targets.

The warning came in the commission's assessment of the strategy that Romania, which joined the European Union a year ago, submitted in December and which covers the 2007-2010 period.

"The increasing deficit of Romania since it joined the EU and its volatility are a matter of serious concern," EU Economic and Monetary Affairs Commissioner Joaquin Almunia said in a statement.

"Romania needs to aim for more healthy budgetary targets to avoid breaching the rules ... and to contain the growing external deficit and inflationary pressures which pose a risk to macroeconomic and financial stability," he said.

Romania's public deficit for 2007 stood at 2.4 percent of gross domestic product (GDP), much higher than expected, and Bucharest has pencilled in a deficit ratio of 2.7 percent this year.

The commission said Romania's strategy "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," it said.