Romanian PM, Mr. Florin Citu, announced what most of the economists already anticipated: Romania will have a huge budgetary deficit this year as well. Precisely, 8.2% by ESA standard, which is used by the European Commission and the international financing institutions.
The news is not good at all for Romania, as the country already registered a huge deficit in 2020: 9.1% by ESA standard. Of course, the last year’s deficit is a direct result of the economic crisis, but the fact is that, in PM’s opinion, Romania will get back to the budgetary deficit target of 3% only in 2024.
I want to offer you some numbers. The economic growth (in 2021) is estimated to be 4.3%, with a nominal GDP of RON116 B (EUR 23,7 B). This nominal value is almost like the last year’s one and similar to the nominal GDP of 2019. So, 3 years in a row the GDP stayed at almost the same level. During this time, the expenditures grew very much. The budgetary deficit we estimate is around 7.16%, but we are still working on it. This figure leads to a deficit of almost 8.2% by the ESA standard, as evaluated by the European Commission and the international partners.
Last year we had an ESA budgetary deficit of 9.1%. This year we’ll improve this figure by less than 1%. I want you to know that the Commission is not happy with this small improvement and we’ll have to persuade them that we are to be trusted and that’s why we come up with estimations for 2022 as well.
We’ll get below 3% on cash and ESA deficit in 2024. For 2022 we estimate a deficit of 5.84% on cash and 6.36% by ESA standard, in 2023 we estimate a 4.27% on cash and 4.68% on ESA. In 2024, 2.89% on cash and 2.9% on ESA.
It is a 4 year program to stabilize Romania’s public finances.Romanian PM Florin Citu on Romania’s budgetary deficit in 2021
Though the estimations show a not so bright future in terms of budgetary deficit, the fact that Romania’s economy will continue to grow this year as well is good news. But, will it be good enough to maintain the country’s ranking at BBB-? We do hope so.
Photo source: Gov.ro