(BUCHAREST) - Romania's public deficit will remain below three percent of gross domestic product (GDP), the finance minister said Wednesday in response to a threat of a possible European Union excessive deficit action.

"Tomorrow (Thursday) I am going to write to the European Commission to signal our commitment to remaining below a deficit of three percent," Economy and Finance Minister Varujan Vosganian told AFP.

On Monday, the EU Commission revised higher its forecast for Romania's public defict this year and next to 3.2 percent of GDP from a previous estimate of 2.6 percent.

The Commission highlighted the risk of Bucharest easing its fiscal policies and exceeding the EU deficit limit of three percent of output.

But Vosganian said: "The situation has improved thanks to higher than anticipated revenues and some budget expenditures in the first quarter that were less" than forecast.

Romania joined the EU on January 1 but Bucharest is being closely scrutinised by EU officials to make sure it continues to meet membership criteria, especially in the judicial and economic domains.

The finance minister acknowledged that parliament, where the economically liberal government does not hold a majority of seats, had adopted several propositions termed populist by the media and which could increase the public deficit.

"But these laws will not take effect this year and will therefore not affect the 2007 budget," he said.

Vosganian added that "2007 will be the first year in which the tax law will not be amended," a recurring demand of business leaders who complain about the difficulty of keeping up with regularly changing legislation.

The minister also said that three electric power plants that have attracted interest from foreign investors could be privatised, in addition to a Daewoo auto factory that is said to interest Ford and General Motors.

Text and Picture Copyright 2007 AFP. All other Copyright 2007 EUbusiness Ltd. All rights reserved. This material is intended solely for personal use. Any other reproduction, publication or redistribution of this material without the written agreement of the copyright owner is strictly forbidden and any breach of copyright will be considered actionable.