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The Fiscal Council: implementation of the pensions law would make almost impossible the reduction of the budgetary deficit in 2021
The Fiscal Code (FC) draws the attention that keeping the present calendar for the implementation of the pensions law without any other credible and ample compensatory measures would make almost impossible the reduction of the budgetary deficit in 2012 against the level of this year. CF draws the attention that keeping the present calendar for the implementation of the pensions law, without credible and ample compensatory measures would make almost impossible the reduction of the budgetary deficit in 2021 against the level of this year, as it is already dangerously high. Coming back to the fiscal-budgetary sustainability is essential to cover these periods which are very difficult and need a new calendar for the implementation of the pensions law, as well as the communication in time of the plans for fiscal-budgetary plans’ the Fiscal Council says in the annual report for 2019.
The general consolidated budget for 2019 was built on a scenario of macroeconomic evolution which estimated growth in real terms of GDP of 5.5% with a target of budgetary deficit of 2.76% of GDP, namely a deficit in terms ESA 2010 of 2.78% of GDP.
The structural deficit estimated now for 2019 was 2.97% of GDP , leaving substantially the medium term objective of 1% of GDP. In April, the government adopted exceptionally the draft for rectification of the general consolidated budget in the context of extraordinary circumstances represented by the COVID-19 pandemics. CF keeps its evaluation with regards to the coordinates of the fiscal-budgetary framework for 2020 with regards to the budgetary draft published on 24th April, considering that, besides the macroeconomic scenario assumed by the government and which leads to a deficit of 6.7%, it is prudent to take into consideration another two scenarios based on a more severe contraction of the GDP. The two scenarios would lead to budgetary deficits for 2020 of 8.1% - 8.9% and 9.9% - 10.4% respectively of GDP,much over the current estimate of the government.
The balance of risks belonging to these estimats goes, according to CF, on the negative part, the existence of a higher level of budgetary deficit’ the Fiscal Council says. Similarly, the structural deficit worsened significantly in 2019, at 4.3% of GDP as compared to 2.92% in 2018, 3.05% of GDP in 2017,1.9% in GDP in 2016 and 0.4% of GDP in 2015.It should be mentioned the high value of the structural primary deficit which reached 5.2% in 2019 ( the highest level in the EU)in continuous growth over the last four years, from only 0.4% in 2015.
In 2019, the economic activity in Romania continue to develop on a upwards trend, the growth rhythm being near the level of 4% (4.1% advance in real terms, against 4.4% in the previous year). Thus, after a period of successive growth starting with 2011, the level of real GDP of 2019 is 28.3% higher than that recorded in 2008 when there was the maximum value before-crisis.
The trend of the Romanian economy goes according to the trends at the level of the EU, where in 2019 there was a moderate advance but stable in the context of positive evolutions in the commercial relations the US-China, the balance being a fragile one due to the geopolitical and social tensions which are present. By comparison to the other EU states, Romania kept in the top group of economic growth at European level, following ( Ireland (5.5%), Hungary (4.9%), Malta (4,4%) and Estonia (4.3%), CF says.