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owth will not comply with the recommended expenditure benchmark. On the other hand, the general government debt amounted to 35.0% of GDP in 2017 and is planned in the programme to remain well below the threshold of 60 % of GDP for the entire period. In spite of the significant deviation from the structural deficit rule, the correction mechanism set in FRL has not been triggered, even thought no exceptional circumstances were identified. This is because both the 2017 and the 2018 budgets contain derogations from the non- respected national fiscal rules, as well as from the correction mechanism itself. According to the national Fiscal Council, the 2017 budget "deviates deliberately and substantially from the fiscal rules imposed by both national laws and European treaties signed by Romania". Similarly, the 2018 budget "is in flagrant contradiction with the fiscal rules set up by the FRL"10. 9 Fiscal Responsibility Law no. 69/2010, amended by Law 377/2013, as republished in 14 May 2015. It entered into force on 23 April 2010. 10 Fiscal Council’s Opinion on the State Budget Law, the Social Insurance Budget Law for 2017 and the Fiscal Strategy for 2017-2019, and Addendum to Fiscal Council’s preliminary opinion on the State Budget Law, Social Insurance Budget Law for 2018 and Fiscal Strategy for 2018-2020, both available at http://www.fiscalcouncil.ro/ 18 7. SUMMARY In 2017, Romania continued to increasingly deviate from the MTO. The growth of net primary government expenditure was well above the expenditure benchmark, pointing to a significant deviation by a large margin (deviation of 3.3% of GDP). The structural balance deteriorated to -3.3% of GDP, also pointing to a significant deviation from the recommended structural adjustment by a large margin (deviation of 1.7% of GDP). Following an overall assessment, this points to significant deviation from the recommended adjustment path towards the MTO. This assessment is in line with the earlier conclusion of 5 December 2017, in which the Council found that Romania had not taken effective action in response to the Council recommendation of 16 June 2017. Both in 2018 and in 2019, there is a risk of deviation from the structural adjustment recommended by the Council, both based on the Programme and based on the Commission 2018 spring forecast. Moreover, although the Programme projects the headline deficit to remain below the 3% of GDP reference value, according to the Commission 2018 spring forecast Romania's headline deficit is projected to exceed the reference value in 2018 and in 2019 based on a no-policy change assumption. 19 8. ANNEXES Table I. Macroeconomic indicators 2000- 2005- 2010- 2015 2016 2017 2018 2019 2004 2009 2014 Core indicators GDP growth rate 5.4 4.3 1.4 4.0 4.8 6.9 4.5 3.9 1 Output gap -0.2 5.1 -4.2 -2.5 -1.5 1.2 1.4 1.1 HICP (annual % change) 26.0 6.8 4.0 -0.4 -1.1 1.1 4.2 3.4 2 Domestic demand (annual % change) 7.5 6.6 0.6 5.4 5.3 7.6 4.9 4.3 3 Unemployment rate (% of labour force) 7.8 6.6 7.0 6.8 5.9 4.9 4.5 4.4 Gross fixed capital formation (% of GDP) 21.3 29.7 25.9 24.7 23.0 22.6 22.9 23.6 Gross national saving (% of GDP) 17.4 18.9 23.6 24.6 21.9 20.9 21.0 21.2 General Government (% of GDP) Net lending (+) or net borrowing (-) -2.5 -4.0 -3.9 -0.8 -3.0 -2.9 -3.4 -3.8 Gross debt 22.6 14.9 35.4 37.7 37.4 35.0 35.3 36.4 Net financial assets 29.8 11.2 -16.7 -20.4 -21.4 n.a n.a n.a Total revenue 32.6 32.5 33.5 35.0 31.6 30.5 30.9 31.1 Total expenditure 35.1 36.6 37.4 35.8 34.6 33.4 34.3 34.9 of which: Interest 2.6 1.0 1.7 1.6 1.5 1.3 1.4 1.4 Corporations (% of GDP) Net lending (+) or net borrowing (-) -5.3 -1.3 5.0 -5.6 -4.2 -2.8 -1.8 -0.5 Net financial assets; non-financial corporations -84.7 -97.0 -86.6 -87.9 -83.1 n.a n.a n.a Net financial assets; financial corporations 0.3 -1.1 3.9 3.7 2.0 n.a n.a n.a Gross capital formation 17.1 20.1 15.6 14.7 15.3 16.8 17.2 17.7 Gross operating surplus 23.1 26.1 30.3 31.7 32.3 32.7 32.7 33.5 Households and NPISH (% of GDP) Net lending (+) or net borrowing (-) 3.3 -3.6 -2.7 8.2 5.4 4.2 2.9 2.2 Net financial assets 33.7 42.2 37.0 50.9 50.7 n.a n.a n.a Gross wages and salaries 31.5 31.4 28.1 27.7 29.3 30.4 35.4 35.1 Net property income 3.4 0.7 6.6 18.0 15.6 13.6 12.5 11.6 Current transfers received 15.2 14.7 14.1 13.6 13.7 13.6 13.5 13.7 Gross saving -2.7 -4.6 0.9 11.3 8.7 7.6 6.2 5.1 Rest of the world (% of GDP) Net lending (+) or net borrowing (-) -4.5 -9.0 -1.4 1.8 -1.1 -1.9 -2.1 -2.1 Net financial assets 23.3 46.5 65.1 55.8 54.0 n.a n.a n.a Net exports of goods and services -7.0 -11.0 -3.6 -0.6 -0.9 -2.1 -2.4 -2.6 Net primary income from the rest of the world -1.8 -2.3 -1.2 -1.9 -3.0 -2.6 -2.3 -2.3 Net capital transactions 0.4 0.4 1.4 2.4 1.0 1.6 1.6 1.8 Tradable sector 59.1 54.3 50.7 50.3 51.9 52.3 n.a n.a Non tradable sector 30.6 34.8 37.5 37.6 37.8 38.3 n.a n.a of which: Building and construction sector 5.9 9.3 6.9 5.9 6.1 5.9 n.a n.a Real effective exchange rate (index, 2010=100) 72.2 95.9 91.8 85.7 87.6 96.1 98.6 99.4 Terms of trade goods and services (index, 2010=100) 75.6 92.1 101.4 105.9 106.4 104.8 104.9 105.3 Market performance of exports (index, 2010=100) 76.4 90.9 114.8 130.4 136.4 141.7 144.1 146.7 Notes: 1 The output gap constitutes the gap between the actual and potential gross domestic product at 2005 market prices. 2 The indicator on domestic demand includes stocks. 3 Unemployed persons are all persons who were not employed, had actively sought work and were ready to begin working immediately or within two weeks. The labour force is the total number of people employed and unemployed. The unemployment rate covers the age group 15- 74. Source : AMECO data, Commission 2018 spring forecast 20