Challenge from outgoing Gov’t: Projected economic growth of 4.1 pc in 2016

Postponed several times, maybe in order for it to have an even stronger impact, the former leadership of the Finance Ministry, headed by Eugen Teodorovici, posted the draft 2016 budget on the institution’s website.

According to the draft, next year’s budget is based on a cash deficit of 2.8 per cent of GDP, which corresponds to an ESA deficit of 2.95 per cent of GDP, with projected revenues of RON 227.3 bln (30.5 per cent of GDP) and projected expenditures of RON 248.2 bln (33.3 per cent of GDP), according to Finance Ministry data.
The projection of expenditures took into account the measures adopted both by Parliament and by Government in 2015, measures that will result in a RON 12.6 bln hike in budget expenditures in 2016, the Finance Ministry points out.

The fiscal measures that will come into force in 2016 include the lowering of the standard VAT from 24 to 20 per cent and the lowering, from 9 to 5 per cent, of the VAT on textbooks, books, newspapers and magazines, on services that entail access to castles, museums, historic monuments, fairs, exhibitions, cultural events and movie theatres.

The budget is based on an economic growth of 4.1 per cent. The GDP is estimated at RON 746.6 bln. The average annual inflation rate taken into account stands at 0.5 per cent and the average RON/EUR exchange rate at 4.44.

The number of unemployed persons projected for next year stands at 450,000 persons, and the average monthly net salary at RON 1,950.
The reaction of the new Finance Minister is expected. How much of the former team’s efforts will be adopted by the new team.
According to the draft budget, the economy will grow by 4.1 per cent next year, up from 3.6 per cent in 2015.

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