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Romania might continue also in 2017 a relaxed fiscal policy, which can have a negative impact upon public finance and debt, and a negative potential upon the country's rating, Moody's analyist Mathias Angonin told AGERPRES.
In this context, the quoted analyst estimates that Romania might register in 2017 a fiscal deficit of 3.4pct of the GDP, but also underscores that the fiscal deficits of the country were, in general, lower than the forecasts of the international financial institutions.
"The general elections held on 11 December 2016 led to the formation of a new coalition government. Against the background of a significant fiscal policy relaxation pursued by both the previous Social Democratic government and the technocratic government, we expect fiscal policy to remain loose. This may have a negative impact upon public finances and debt, and will therefore be potentially credit negative," Mathias Angonin said.
He believes that the fiscal deficit might increase in 2017 from 3pct to 3.4pct of the GDP.
"The fiscal outturn will hover around the Maastricht 3pct of GDP, benefiting from cooperation with supranational institutions, which should limit a further deterioration, but we expect the fiscal deficit to breach that fiscal limit in 2017, to 3.4pct of GDP. Throughout the past two years, however, Romania's fiscal deficits have generally been lower than forecast by international financial institutions," Mathias Angonin stated.
He also specified that Romania's associated perspective of the rating Baa3 is positive, reflecting the significant progress in correcting its macroeconomics imbalances, which has, in the agency's view, reduced the economy's vulnerability to external shocks and paved the way for robust economic growth.
The most important fiscal measures which are applied in 2017 are the VAT reduction from 20pct to 19pct, the elimination of the extra-excise on fuel, the special construction duty, environmental stamp, the elimination of the cap of five average gross salaries for the payment of social contributions, the removal of the income tax for pensions lower than RON 2,000, etc. Furthermore, in the beginning of this year the tax regime has changed for the SMEs, the tax rates being now 1pct and 3pct, in accordance with the number of employees. On the other hand, the cap including the category of microenterprises increased from EUR 100,000 to EUR 500,000.
