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October 26, 2021

Citu:Deficit hides rising expenditure, fiscal consolidation not visible

In a public TV show Monday night, PM Emil Boc advised the counsellors of the National Bank (BNR) governor to worry about the central bank reserves and leave the budget deficit with the government, answering recent statements by Lucian Croitoru who did not rule out the possibility that Romania might draw funds from the International Monetary Fund (IMF). ‘We have no intention to draw money from the European Commission or the Monetary Fund’, Boc trenchantly said. As ‘Nine O’Clock’ reported in its Wednesday issue, the premier also said at an economic forum on Tuesday that Romania was much better prepared to cope with the ‘financial storm’ expected the following year than in the past.

Analyst Florin Citu, former ING Bank chief-economist, told ‘Bursa’ newspaper that public expenditure would continue to go up both in 2012 and 2013, following the growth registered in 2011 compared to the previous year’. ‘Both cash and consolidated budget expenditures have grown. The deficit hides a growing public debt and growing government expenditure that we cannot see. Payroll expenditure is now higher than in 2008. No fiscal consolidation is visible, because the deficit can be juggled also through revenue. In what regards the public debt currently at 34 per cent, it has grown from 16 per cent in 2008 and, as IMF also anticipates, will continue along the same upward trend’.

In regard of the PM’s statement that Romania is now better prepared for the ‘turbulence’ in 2012, Citu answers: ‘The PM explains his statement by the fact that we will close this year with an economic growth of 1.5 – 2 per cent of GDP (after four quarters of growth), a deficit of 4.4 per cent (the objective for next year being 1.9 per cent deficit and zero per cent in 2013.and with ‘a level of the public debt of 32 – 33 per cent, while the maximum admissible in the EU is 60 per cent’.

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