22-29 September, 2024

A look at the main headline-making events this past week

Ştefan Stoica, 28.09.2024, 12:26

The first budget adjustment in 2024
This past week, the Romanian Executive adopted the first budget amendment this year. Although it was operated on a revised downward economic growth of 2.8%, and on a larger than estimated budget deficit of 6.9 percent, the correction was a positive one. Finance, Transport, Health and Education received more money, while the budgets of the Ministries of Economy and Development were reduced. The budget adjustent is based on an increase in the revenues collected at the State budget and on investments. Prime Minister Marcel Ciolacu gave assurances that the deficit, already large and viewed, therefore, with concern by specialists, can be borne by the economy. He gave as an example the strongest states in the Union, Germany and France, which promote investments, against the background of a deficit growth. The investments, Ciolacu insisted, will return to the budget 8 times more money than was spent on them. For his part, the Minister of Finance, Marcel Boloş, recalled that the budget for 2024 was built around essential investments in infrastructure, large strategic projects and the improvement of public services for Romanians. He denied that next year Romania will give up the flat tax and switch to the progressive tax, in order to cover the holes in the budget.

A less optimistic forecast
The European Bank for Reconstruction and Development drastically lowered the estimates regarding the evolution of the Romanian economy in 2024, which would register an advance of only 1.4% this year, down from the 3.2% estimate announced in May. In 2025, the GDP growth would be 2.6%, from a level of 3.4% forecast in May. The EU countries in South-East Europe are affected by a weak external demand, although consumption has been resilient, following solid wage increases, the EBRD explains in the report. According to the report, in Bulgaria and Romania, the increase in the minimum wage stimulated demand, but resulted in the expansion of the trade deficit and added to inflationary pressures. In Romania, the IT sector slowed down significantly, in line with the global trends, while industrial production stagnated. On the other hand, infrastructure investments continue to support growth. The international institution also notes that the recent estimates of the Fiscal Council show an expansion of the deficit towards 8% of GDP in 2024. The International Monetary Fund has also revised downwards the estimates regarding the growth of the Romanian economy this year, from 3.8% to 2.8 %.

National intervention at the UN
The President of Romania Klaus Iohannis participated in the 79th session of the General Assembly of the United Nations. “As insecure as the world is today, the answer to our problems will always be more cooperation and more solidarity. Romania will always support the international world order, with the UN at its center”, said the Romanian head of state in his speech. Russia’s war against Ukraine, the president said, has triggered the biggest security crisis in recent European history, violating international law and having implications far beyond the continent. Ukraine needs the support of all UN member states, determined to respect international law and the UN Charter, Klaus Iohannis also stated. He emphasized that Romania fully supports President Zelenskyi’s peace initiative, as the only approach that can ensure a just and lasting peace, in full agreement with the UN Charter and international law. In Iohannis’ opinion, there is no viable alternative to the United Nations, and the principles on which it was built remain more valid than ever. We are now focusing, the president said, on continuing the reform of the UN, so that it is able to face current and future challenges.

American loan for the Romanian army
On Wednesday, Romania signed a loan agreement with the United States worth almost 1 billion dollars. Bucharest is confident that the 920 million dollars from the United States will allow the strengthening of the country’s defense capacity, by equipping the Romanian Armed Forces with modern equipment and developing the local defense industry. Kathleen Kavalec, the ambassador of the United States to Bucharest, said that the document is more than a simple financial agreement, as it represents the strength and resilience of the bilateral partnership, as well as the common commitment to ensure peace, stability and security in the region. By offering American funds, Washington’s goal is to ensure that Romania remains at the forefront of innovation and military equipment for many years to come, which will equally strengthen bilateral economic relations, Kathleen Kavalec said.

Good start for FCSB in Europa League
Upon returning to the continental competitions, FCSB defeated the Latvian team RFS with a score of 4-1, on Thursday evening, at the National Arena in Bucharest, in the first stage of the new Europa League football format. The Romanian champion will play seven more matches in the group, and its opponents include the Scots from Glasgow Rangers, Manchester United, PAOK Thessaloniki and Olympiakos Piraeus, as well as the Germans from Hoffenheim. FCSB is the only representative of Romania in European cups. (MI)