Senate Chairman Calin Popescu-Tariceanu, said Monday, after the European Commission issued its winter economic forecasts, that the deficit in Romania’s national budget will be higher in 2017 than it was in 2016, but it will not exceed 3 percent.
“I can confirm that the 2017 budget deficit will be somehow higher than in the previous year, but it will not exceed the 3-percent cap. We discussed all that when we had the national budget debates. We thought additional funds were required for investment so that Romania may ground its economic growth on the investment engine, instead of only on consumption. (…),’ Tariceanu said Monday.
Asked about the European Commission’s estimated 3.6-percent deficit for Romania in 2017, Tariceanu said, “I have not retained that there will be a deficit of 3.6 percent; what I have retained is that increases in certain prices are supposed to be expected. I do not want to go into such details; I do not think this is the way to have a conversation with the European Commission.”
European Commission revises estimates regarding Romanian economy growth in 2017 to 4.4 percent
The European Commission (EC) revised the estimates regarding the growth of the Romanian economy in this year to increase to 4.4 percent, the growth following to slow down to 3.7 percent in 2018, according to winter economic forecasts published on Monday by the community Executive.
The estimates were revised to increase compared to the forecasts in autumn, when the community Executive estimated that Romanian economy will record a growth of 3.9 percent in 2017 and one of 3.6 percent in 2018.
“The actual growth of the GDP is estimated to remain firm in the forecasted interval, endorsed by fiscal easing and wages increases. The unemployment had significantly dropped in 2016 and it’s forecasted to remain on a low level (…) The governmental deficit is estimated to grow, following tax cuts and public expenses growths.
In respect to public deficit, according to new estimations, the public deficit is to reach 3.6 percent of the GDP in 2017, compared to 3.2 percent which was estimated in autumn, because in 2018 it should reach to 3.9 percent of the GDP.
“The budget for 2017, which was adopted by the new Government, contains more tax cuts (especially removing social contributions for small pensions) to which it’s added the overall expenses for pensions and wages in the public sector. Therefore, the governmental deficit is forecasted to grow to 3.9 percent of the GDP in 2018 because of the significant growth of pensions, planned for July 2017,” the EC warned.
In regards to inflation, the EC estimates that it will go back to a positive track in 2017 (1.6 percent) and it will further grow until 2.9 percent in 2018, due to the intensely robust demand, supported by the growth of minimum wage in February. “The risks regarding inflation are oriented upwards by the combination between the solid domestic demand, wages increases and growth of oil prices on the international market,” the community Executive claims.
The EC estimates that all economies in the European Union will increase in 2017 and 2018, for the first time in the last nine years, but warns in respect to “the high degree of uncertainty” that was forecasted, which are connected to the new US administration, future elections in some European states and the Brexit.
In the winter forecasts, Brussels revised in a slight growth, the estimations regarding the advance of the GDP in the Eurozone for this year and for 2018, compared to the autumn forecast (1.6 percent in 2017 and 1.8 percent in 2018, compared to 1.5 percent and 1.7 percent previously). For the EU, a slight increase of 1.8 percent is forecasted both in 2017 and in 2018 (compared to 1.6 percent and 1.8 percent).