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The minister of finances: we are prepared to reduce expenditure, if the budgetary deficit is in danger to be surpassed

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Romania will obey the budgetary deficit target of 3% of GDP included in the Maastricht Treaty and if the deficit gets higher, then the government is prepared to reduce the expenditure, the minister of finances Viorel Stefan says.

‘We will take measures to reduce the expenditure, if there are problems’ Stefan said, when presenting the country report for 2017 for Romania of the European Commission.

This means that the government prefers to reduce the expenditure instead of surpassing the deficit. Stefan did not say what type of expenditure he is prepared to reduce. In practice, the first type of expenditure which will be cut to keep the deficit is that of investments. The state investments dropped in 2016 by 40% from 41 billion lei in 2015 to 29 billion lei. This year they are programmed to reach 39 billion lei.

The European Commission is worried that Romania could have this year the highest increase of the budgetary deficit in the EU although the government said there are no worries about this, stated on Wednesday Angela Cristea, the head of the Office of EC in Romania on the occasion of the launching of ‘The economic report for Romania 2017’.

„Romania registered in 2016 the highest economic growth from Europe, of 4.9 percent. At the same time, the report draws the attention upon the risk that this year will have on the highest public deficit increase. The Government said that there is no reason to worry in this respect, but we are. It’s better to be worried and nothing happens, to conclude in the report from the next year that we worried in vain,” said Cristea.

She said that in Romania there’s a high social inequality, a tendency since 2012.

„We see a poverty tendency, but also an increase in the social inequalities. It’s not a punctual phenomena, but a tendency since 2012. It’s not only specific to Romania, but we observe it in other EU states,” added Cristea.

According to the economic forecasts from the winter published in the middle of February by the EU executive, the public deficit might reach 3.6 percent of the GDP in Romania in 2017, compared with 3.2 percent hat was estimated in the autumn and in 2018 it will hike to 3.9 percent of the GDP.

„The budget for 2017 adopted by the Government contains several cuts in taxes to which are added the majority of expenses for pensions and salaries in public sector. As a result, the Government is forecasted to reach 3.9 percent of the GDP,” said the European Commision at that time.

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