Limitations on Government Debt and Deficits in Romania

The Romanian legal system has gradually evolved in the past 5 years to include a set of principles and rules limiting the public debt and deficits and creating a supervision and correction framework. This legal mechanism aiming to ensure fiscal and budgetary discipline has been inspired from two main sources: in first place, the conditions attached to the financing agreements entered with the international financing institutions in the aftermath of the 2009 crisis, and further the transposition of the principles included in the EU regulations aiming to reinforce the fiscal-budgetary policies, as the Six-Pack and the Two-Pack, as well as of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union. Although including a balanced budget principle and a debt brake, together with fiscal discipline rules and a permanent assessment of fiscal-budgetary strategies, measures and regulations by an independent Fiscal Council, and thus complying with the principles agreed in this respect at the European level, the national fiscal-budgetary mechanism has a major weakness, derived from the fact that all such rules are included in ordinary laws, situated on the same level of the hierarchy of norms, and thus easily amendable upon approval or rectification of annual budgets. This leaves place for a future debate on the role of the balanced budget rule during the envisaged constitutional reform.