The budget deficit in the first six months of this year is reasonable in the economic context we are going through and if we also look at what is happening in the rest of Europe, Finance Minister Florin Citu said on Tuesday evening at the private broadcaster B1 TV.
"Half of the deficit, which is about 23 billion lei, represents the fiscal measures we have taken (...). These amounts are money that has remained with companies, so the economy goes on, through those fiscal measures we have taken. COVID-19 expenses are 5 billion RON, directly related to COVID-19. At the same time, the deficit is slightly higher because we have not yet received the amounts from the European Commission, on the settlement of certain expenses. It's about a billion and a half RON. It would reduce the deficit a little more. But it's a deficit, I say, if we look at the economic context we're going through, a reasonable deficit. If we look at what is happening in the rest of Europe, where deficits are close to 10 pct, it is a reasonable deficit. And we've been able to keep a measure of the situation, because we're not a rich country after all. Romania is a country that has a certain rating, we have a difficult economic situation, we have entered with a deficit in this crisis and then we had to be very cautious and very careful how we spend the money," the minister said.
On the other hand, he admitted that it is a large deficit and, therefore, a half-year spending revaluation must be carried out and seen what can be postponed for the years to come.
"Yes, it's a big deficit if we look the other way and, that's why, when it comes to spending for the rest of the year, we've always said we have to do a mid-year revaluation. We have the figures, this is the deficit and we need to make a reassessment of all the expenditure, all the expenditure in the budget. And we look at what we can postpone for years to come, what it is not urgent, what we have included in the budget and it is not urgent. I'm telling you, we're not going to postpone investments. Investments that have been budgeted and started this year are already in operation and will not be postponed. They will have extra money allocated. But there will be other expenses that can be postponed, I have discussions with the loan authorising officers, things they wanted to do and we can do next year," explained Florin Cîtu.
The implementation of the consolidated general budget in the first six months of 2020 registered a deficit of 45.17 billion RON (4.17 pct of GDP), according to data published on Tuesday by the Ministry of Public Finance.
"More than half of the deficit, i.e. 23.04 billion RON (2.13 pct of GDP), is generated by the amounts left in the economic environment through the fiscal facilities and exceptional expenses adopted to combat the effects of the COVID-19 epidemic," MFP states.
In the first five months of this year the budget deficit stood at 38.84 billion RON (3.59 pct of GDP), while in the first half of 2019 it was 19.96 billion RON, or 1.94 pct of GDP.
A month ago, the Minister of Finance declared that Romania will register this year a budget deficit of 6.7 pct of GDP, and the economic contraction will be at the end of the year at 2.2 pct of Gross Domestic Product.