IMF representative warns Romania about risks of exceeding the budget deficit target

The representative of the International Monetary Fund (IMF) warns about the risks ahead this year. The Government is likely to exceed this year’s budget deficit target of 3% of the GDP. In particular, there is a risk that the difference between revenues and expenditures will reach 3.6% of GDP, amid large social spending that does not keep up with the revenues. The concern of IMF officials is shared by the representatives of the Fiscal Council, which emphasize that the wage bill in the budgetary sector will reach a historic high by the end of the year, digi24.ro informs.

“We see for this year a budget deficit of 3.6% of GDP, we are still analysing the figures of the latest budget revision. For the moment, we are concerned that the 3% budget deficit target could be missed,” said the IMF representative in Romania, Alejandro Hajdenberg.

The IMF is in the process of reviewing Romania’s economic growth estimates for this year from 5.1% currently to the 4-4.5% area, but these figures are still under discussion, the IMF resident representative for Romania Alejandro Hajdenberg announced on Thursday. This review is based on the developments in recent months, the official said.

On the other hand, Ionut Dumitru, President of the Fiscal Council, says that “if nothing changes by the end of the year and the budget is completed according to the rectification, the probability to exceed the 3% threshold is very high, given that part of the expenditures is still under-budgeted. We look at the social assistance, which seems under-budgeted, whereas some revenues seem over-budgeted. In this context, the risks are more likely to have a deficit higher than 3%.”

“The budget’s main problem is the spending strategy. In recent years, we have had increasing expenses on the social side, on pensions and wages, while investments have decreased, meaning that we sacrifice the future for a deceitful present, given that if we look at the wages bill in the budgetary sector, they will reach historical highs, even higher than before the crisis, when it was found that it can no longer be supported. This year the level will be of 9.5% of GDP, which is the highest historical one,” Ionut Dumitru explained.

The Government has built its budget for this year on an economic growth estimate of 5.5%. At the same time, despite the lack of an opinion received from the CSAT, the Government approved on Wednesday the first budget rectification.