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March 29, 2023

Fiscal Council: Economic growth will exceed 2 pc, but will not reflect in budget revenues

Romania’s economic growth in 2013 is most likely to exceed 2 percent, but it will not entirely reflect in the budget revenues, Fiscal Council President Ionut Dumitru said on Monday, at the end of the discussions with the International Monetary Fund (IMF) mission.
‘I can tell you that at present the 1.6 percent forecast [economic growth based on which the budget is built] seems a little pessimistic, given the latest evolutions and the very good agriculture, as foreseen. We are most likely to exceed 2 percent, but I cannot tell you what forecast the IMF will have or what prognosis will be included in the budget. The important thing for the budget, though – even in case we have a higher economic growth, which is the most probable scenario at present, is that I do not believe this thing will reflect in higher collections to the budget, because it is a growth generated by the export part, as shown in the first quarter, which does not generate very high budget collections, and as concerns the sectors’ part – agriculture does not have a very large contribution to the budget revenues, either,’ the Fiscal Council President said.
Ionut Dumitru underscored that economic growth would be most probably revised upwards after the negotiations with the IMF, but it would not entirely reflect in the budget revenues projections.
Underground economy stands at 30pct of GDP
The underground economy in Romania stands at approximately 30 percent of the GDP and the tax evasion is estimated at about 10 percent of the GDP, Fiscal Council President Ionut Dumitru also said. ‘Our estimations, too, point to an underground economy accounting for around 30 percent of the GDP, near the figure of EUR 30-40 bn the survey revealed. The tax evasion estimation stands somewhere around 10 percent of the GDP, therefore EUR 20 bn would be a little too much. Nevertheless, tax evasion in Romania is very high compared with other European states. We are probably on top of the ranking in Europe,’ the Fiscal Council President also said.

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