Budget for 2016, according to former Fin Min Teodorovici: GDP of RON 746.6bn, ESA deficit of 2.95 pc, wage increases and 4.1 pc growth

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The budget for 2016 was built by the former Finance Minister Eugen Teodorovici, considering a 2.95% ESA deficit of GDP and of 2.8% in cash, based on an economic growth of 4.1%, fuelled by consumption and investments, while the GDP is estimated at RON 746.6 billion. The draft includes all the approved salary increases, respectively by 25% for the staff in the health system and for the social assistance system, including indemnities for disabled people, by 15% for the education system, as of December, and by 10% for the rest of the state employees.
The average annual inflation is forecast at 0.5% and the average exchange rate at RON 4.44/EUR.
The budget forecasts a budget deficit (cash) of about 2.8% of GDP (RON 20.9 billion), corresponding to an ESA deficit of 2.95% of GDP and a structural deficit of 2.73% of GDP, which is the medium-term budgetary objective (Medium Term Objective – MTO).
For 2017 the ESA deficit is estimated at 2.91%, the structural deficit at 2.88% of GDP and the cash deficit at 2.79%. They are expected to fall in 2018 to 2.64% ESA deficit, 2.74% structural deficit and 2.64% cash deficit, and in 2019 will reach 1.76% ESA deficit, 1.75% cash deficit and 2% structural deficit, the latter recovering from the deviation from the target of 1% of GDP.
The consolidated general budget revenues are estimated at RON 227.3 billion, representing 30.4% of GDP, while expenditures are to reach RON 248.2 billion, accounting for 33.2% of GDP.
The measures taken by the Government and Parliament have the effect of increasing expenditures by about RON 12.6 billion, which also include 5% pension increase and the amendment of the law on private pension funds, so the contribution rate is to increase to 5.5% next year and to 6% in 2017.
Investment expenditures next year will be cut to 4.5% of GDP, from 6.4% this year, and for the following years the expenditures are envisaged to 4.3% in 2017, 4.9% in 2018 and 4 7% in 2019.

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