Romania is expected to have a budget deficit of 8.4% of GDP this year, according to what was agreed with the European Commission representatives, Prime Minister Ilie Bolojan declared on Wednesday.
The adopted fiscal packages will have an effect of 0.6 - 0.7% of GDP this year, but will increase to over 2.5% of GDP next year, the prime minister said in a press conference held at Victoria Palace.
Ilie Bolojan mentioned that on Monday, in Brussels, he had three important meetings: with the European Commissioner for Economy and Productivity, Valdis Dombrovskis, with the European Commissioner for Defense and Space, Andrius Kubilius, as well as with the Vice-President of the European Commission, Roxana Minzatu.
"At the meeting with the Commissioner for Economy, the budget and European funds aspects were discussed, on the PNRR component. Based on the discussions that took place in the preceding weeks between the technical teams of the Ministry of Finance and those of the Commission, we agreed on a deficit with which Romania would close this year of 8.4% of GDP. This means a deficit of approximately 159 billion RON, which represents almost 32 billion euros. This means that the expected effects of the packages that were adopted this year will be approximately 0.6 - 0.7% of GDP. This is because this year the effects are only on the last three-four months and, by annualization, they are greatly reduced. And next year the effects of the measures would be over 2.5% of GDP," the prime minister said.
He added that, if Romania meets the deficit target of 8.4% this year, next year it could approach a target of just over 6% of GDP. In this way, our country would enter a "normal trajectory", in which primary expenditures would constantly decrease.
"The main influence of this budget amendment and this 8.4% deficit is the increase in the cost related to interest. Initially, a cost of a little over 40 billion RON was estimated. In an assessment this fall, the cost will exceed 50 billion. This is the main influence related to the deficit component. The Commissioner and the Commission team understood the measures that were taken by Romania and their importance, but also the difficult budgetary situation we find ourselves in. We could not consider this understanding to be a fait accompli, except under the conditions in which we respect budgetary discipline, both this year and next year. We will seriously continue the reforms that must take into account the decrease in expenses and a more efficient state. And also to maintain political stability," Bolojan specified.
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