The president of the Romanian Fiscal Council, Daniel Daianu, said on Wednesday that Romania has been living beyond its means for many years and that the situation would have been far worse without the economic and fiscal measures adopted recently.
"Romania has for many years been living beyond its means, which explains the rise in public debt from 39% of GDP in 2019 to around 60% of GDP now. The very large deficit in 2024 over 9% of GDP was not a sustainable trajectory. The blow would have come and hit us very hard, with significant direct and collateral damage, had this correction not begun. The adjustment is on the right track, even though it entails hardship, because a fiscal adjustment of this magnitude which will not end this year and will continue beyond 2026 cannot but affect people's lives and business activity. There is no alternative!" Daianu said.
The president of the Romanian Fiscal Council added that a deficit of around 6.2% this year would be a very positive signal for the economy.
"I would say that if we achieve a deficit of around 6.2% this year which is possible it would be very good not only for our economy, but also for our ability to continue financing the deficit and refinancing public debt. Because, again, we cannot maintain deficits of around 6% in the years ahead," he said.
Daniel Daianu also referred to the impact of the Middle East conflict on economic developments.
"The second determinant is linked to the war in the Middle East. It is very good that there is a two-week ceasefire. It offers a moment of respite and calms the markets. Let us hope an agreement will be reached. This is an important factor, as inflation in Romania was already high. There will be disinflation in the second part of the year, despite this strong shock. We will see an inflationary spike and an increase in the relative price of energy. Oil prices have declined somewhat, but they will not return to pre-war levels. In my view, fuel prices cannot go back to the levels seen before the outbreak of the war, partly because energy infrastructure has been destroyed," he said.
Daniel Daianu on Wednesday launched his book "Crises and the Temptation of Authoritarianism" at Babes-Bolyai University in Cluj-Napoca.
The volume was presented by UBB rector Daniel David, former chief negotiator with the European Union Vasile Puscas, and the dean of the Faculty of Economics and Business Administration, Razvan Mustata.
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