Highlights of the 2022 budget
Romanias finance minister has launched for public debate the draft budget for next year, which envisages a 4.6% economic growth rate and a budget deficit of 5.84% of the GDP.
Mihai Pelin, 20.12.2021, 13:50
The draft state budget for 2022 is likely to reach Parliament and be voted on fast, before Christmas. It was launched for public debate on Sunday and aims to protect vulnerable groups, to reduce tax dodging and increase investment funds up to 7% of the GDP. According to the draft budget, in 2022 Romania will have revenues of 216 billion lei (43.8 billion Euros) and will spend 301 billion lei (61.4 billion Euros). The Finance Ministry expects sustained economic growth next year and hopes to meet the deficit target agreed upon with the European Commission. In the “Budget Allocations” chapter, the Transport Ministry will receive 20% more funds in 2022 than in 2021. The Ministry of European Investment and Projects will also have a substantially increased budget, alongside the Defense, Education and Culture ministries.
The Presidential Administration, the Senate, the Chamber of Deputies and the Government’s General Secretariat, as well as the secret services, will have additional funds. Among the institutions that receive less money are the Ministries of Finance, Development, Energy, Entrepreneurship and Tourism and the Public Ministry. The Health Ministry will have about the same budget as this year. According to data published by the Finance Ministry, the draft budget is based on an economic growth rate of 4.6% and a budget deficit of 5.8% of the GDP which has been estimated for 2022 at about 1.300 billion lei (265 billion Euros). At the same time, the average inflation rate has been forecast at 6.5%.
According to the budget strategy, the estimates for the next three years show an economic growth peak in 2023 of 5.3% and an average annual rate of 4.9% over the entire period 2023-2025. This is higher than the rate estimated in the EU and the Eurozone, of 4.3%, given that the economic shock caused by the pandemic is one of the most significant in recent history. Romania, however, has the advantage of a relatively rapid return of the GDP to the pre-pandemic level. The draft budget also stipulates that the worst moment of the crisis has been overcome by fiscal and monetary measures that boosted economic activity.
However, economic developments are dependent on the evolution of the vaccination campaign, on potential future pandemic waves, the specificities of the economic structure and the external influences caused by the degree of integration into the European and world value-added and production chains. At the same time, the measures adopted by the authorities in the context of the manifest twin imbalances — of the current account and fiscal account — will also have an influence. The support measures will be gradually withdrawn to reach the assumed 3% budget deficit target by 2024. (LS)
