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The 6-month budget execution showed us that we can keep the deficit under control, but the criticisms of the Fiscal Council are relevant and must be taken into account, Minister of Finance Adrian Caciu told the press conference organized on Thursday, after the Government meeting in which this year's first budget revision was approved.
"I have always considered the criticisms of the Fiscal Council relevant and they must be taken into account, because there are always risks in the execution of the general consolidated budget. The 6-month execution showed us that we can keep the deficit under control. You saw that we have 1.7 pct of GDP, the 7-month execution will appear soon and you will see that we are below 2 pct of GDP. It is imperative that the Government and all of us take into account the risks that the Fiscal Council draws attention to, including the failure to achieve revenues, but also to additional expenditures being made. The goal we assume is to maintain the deficit at 5.84 pct. The basic idea is this: we have a series of support packages, measures that are directed at the population and the economy. It is obvious that you do not go for austerity from this perspective, in the sense of no longer financing the economy and the citizens as long as you have assumed the support packages. Covering those support packages leads us to maintaining the deficit as a share in GDP, because this is a commitment with the European Commission, but obviously on the nominal side the figures are related to the nominal GDP and then you have an arithmetical increase in the deficit," Caciu explained.
Asked if Romania could face the risk of an economic crisis, the official emphasized that the current Government is acting strategically to keep things under control, but did not deny the fact that "recession-related risks" may appear.
"The situation has been complicated ever since the current Government took over office. It was complicated before, it became more complicated especially since February when the conflict in Ukraine also appeared. I think that this Government acted every day, step by step, but in a strategic way so as to keep everything under control. There are risks, we are not in an oasis where we are safe from the risks of pressure elements, for example recessionary trends. These are anticipated step by step, because you have to look at how certain indicators, like the proxies, work, and I'll give you an example that everybody's looking at -- industrial production on the decrease. That shows that we're going to have a difficulty, at least in the third to the fourth quarter, and you have to take some steps to revive that area, so that the economic losses are not felt horizontally. So, there are recessionary risks," said the Finance minister.
He also conveyed to economic analysts to "be a little more moderate in their assessments" and stop presenting "apocalyptic scenes".
"However, I would like our economic analysts to be a little more moderate in their assessments, when presenting apocalyptic scenes, because it was not necessary to announce a stagnation in the second quarter. Yes, there are economic slowdown pressures that we are taking into account. Precisely for this reason, the most important thing is the recovery of the delays in the investment area, something that can bring us to a perimeter of balance and of keeping some situations under control, considering the multiplier factor of both public investments, but also the encouragement of private investments. Another reason why we supplemented this part of private investments with one billion RON. Our interest is for the economy to function," said Adrian Caciu.
The Fiscal Council considers that Romania's cash budget deficit is likely to be around 7% of GDP, compared to 5.84% of GDP in the revised budget projection, as this negative balance takes into account revenues from overtaxing of over 12.8 billion RON and total expenses with energy suppliers of approximately 7.4 billion RON, Agerpres.
The Fiscal Council cautions that a revenue gap of approximately 9 billion RON is likely compared to the targets assumed in the budget revision bill, representing approximately 0.66 pct of GDP. On the expenditure side, the institution identified a shortage of 6.2 billion RON, that is 0.45 pct of GDP.
The government approved on Thursday the first budget revision of the year, through which revenues increase by 30.4 billion RON and expenses by 33 billion RON. The consolidated general budget deficit remains at 5.8 pct of GDP.
