IMF revises down the economic growth forecast in Romania, to 2.2%

The International Monetary Fund (IMF) estimates for Romania an economic growth of 2.2% in 2023, in the latest report, being a downward revision from 2.4%, as previously predicted.

As for next year (2024), it anticipates 3.8%, which is an increase from 3.7%.

The average annual inflation expected by the IMF for Romania is 10.7% in 2023 and 5.8% in 2024. A mission of the Fund in the country ended recently, and its representatives stated that the deficit would be 6% in 2023 and 5% in 2024.

The head of the IMF mission for Romania, Jan Kees Martijn, says that the Government’s package of fiscal measures is intended to reduce the budget deficit, but, nevertheless, many other programs are needed to increase efficiency and revenues, in general.

According to him, turnover taxes applied to banks and large businesses place an unfair burden on low-margin companies and can reduce financial intermediation.

“The package of fiscal measures is good, but it needs to be improved. The new fiscal package will improve the situation for 2024 in terms of controlling the budget deficit to be maintained at 3% of GDP. The target will not be reached in 2024. Turnover taxes will be a burden on some companies,” Jan Kees Martijn said about the recently adopted bill on tax measures.

“More work needs to be done on the elimination of loophole tax exemptions and the law on property taxation and the transition to a green economy. Otherwise the results cannot be predictable,” he added.

“It is important for Romania to put public finances on a healthy path. The fiscal package will be an important first step in this direction. Our advice is to continue cleaning the system by removing exemptions. That would be the direction of our advice,’‘ the IMF chief for Romania said.