Less than two months ago, the socialists took power in Romania (simple majority in Parliament, both Chambers) and they have started applying their program.
However, many analysts think that it is not sustainable from the budgetary perspective and that "we are going after Greece". They refer to the fact that public annual deficit will go beyond the EU imposed limit (currently 3.0% of GDP) which will lead the way to an immense government debt.
In the past, Greece and Italy managed to trick EU through manipulated debt and deficit statistics.
Question: is it possible nowadays for an EU country to use similar tricks to go beyond the allowed budgetary deficit? Or this area is much better regulated?
Long version (more context)
Maastricht Treaty clearly states that countries should aim for "sound fiscal policies, with debt limited to 60% of GDP and annual deficits no greater than 3% of GDP". This was confirmed by Stability and Growth pact.
The Government proposed a budget that seems unsustainable in the current economical context:
- significant reduction of some taxes, including VAT
- pensions increase
- social assistance expenditures increase
- an estimated economical growth of more than 5%, which is more than 1% more than any other estimation (EU, World Bank etc.)
- a planned budgetary deficit of 2.99% of GDP
Romania managed to have budgetary deficit below the 3.0% threshold in the last years, but current budget plan is based on unrealistic figures.