Fiscal Council slams 2019 draft budget, says is „excessively optimistic”

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The 2019 draft budget is built on a series of excessively optimistic premises, starting right from the economic growth scenario, followed by the VAT receipts, excise duties, the dynamics of the employees or the gross wage in the competition sector, the Fiscal Council of Romania has announced on Tuesday.

The Fiscal Council has released its comments on the draft state budget for 2019 and on the fiscal strategy for 2019-2021.

The institution argues that a first issue is represented by the economic growth scenario underlying the budgetary construction, saying it is „excessively optimistic as against similar assessments of other bodies, particularly amid the expected slowdown of the Eurozone.

The Fiscal Council also says that the impulsive adoption of some fiscal measures, such as the emergency ordinance 114/2018 has a negative impact on the economy (like the tax on the bank assets and the additional taxation of the energy and telecommunication sectors) and risk amplifying the foreign risks.

Under these circumstances, maintaining the acceleration hypothesis of the real economy to 5.5% in 2019, as against a level ranging from 4 to 4.5% in 2018, appears as surprising and unjustified,” the council points out.

The institution further says that the favorable hypotheses on the dynamics of the employees and of the gross wage, envisaged to increase in 2019 to 3.7% and 13.8% respectively represent another concern. They argue that the recent national statistics reveal a visible slowdown of the employees’ rise in the private sector, from 4% in 2016 down to 3.2% in 2017 and to 1.7% in 2018.

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