Deficit down, growth forecast up
The International Monetary Fund revises upwards Romanias economic growth forecast.
Ştefan Stoica, 27.09.2022, 13:50
Statisticians are providing reasons for optimism at a time when we most need them. The first is that Romanias budget deficit for the first eight months of the year dropped compared with the same period last year from 3.3% to 2.4% of GDP. After the first seven months of the year, the deficit was at some 2% of GDP. Budget revenues went up 20% compared with last year to reach almost 300 billion lei, the equivalent of 60 billion euros. Budget spending amounts to 330 billion lei, up compared with last year by 17%. According to the finance ministry, the growth is mainly the result of an increase in social assistance spending, local budget and the cost of goods and services. The deficit target for this year is 5.8% of GDP.
Another cause for moderate optimism is the upwardly revised forecast of the International Monetary Fund with respect to Romanias economic growth this year, which may reach 4.8%, up more than 2% compared with the previous estimate. The new figure was published after an assessment mission carried out by the IMF this summer. According to the finance ministry, the Funds experts highlighted the need to implement macroeconomic policies to ensure stability and stimulate structural reforms with a view to supporting economic growth, and the adjusted figure is validation of the governments efforts.
The upwards revision of the IMF forecast together with statistics regarding the evolution of the Romanian economy in the first half of the year and other signals on the local and international market show that the impact of the measures taken by the government is the right one from a macroeconomic perspective, says finance minister Adrian Câciu. He added, however, that this is not enough and that Romania must continue to promote a series of reforms, including that of the social security system. The minister gave assurances that the reforms in the National Recovery and Resilience Plan are on track and will also help ensure macroeconomic stability, alongside public investments and budget consolidation.
On the other hand, it is necessary for the government to solve the pay gaps, make the economy more competitive and give a new impetus to exports in order to counteract the rising inflation rates. The finance minister promised that in the short term, the government will act so as to protect vulnerable categories from the energy crisis and the price hikes. The coalition dominated by the Social Democrats and the Liberals is already having talks on increasing pensions and the minimum wage. Commentators are saying that the percentage of the rise will have a strong political connotation and will be reflected on the budget deficit at the end of the year. (CM)
