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Dochia: Romania started on a trend of accelerated growth of the deficit: in 2018 inevitably we surpass 3% of GDP

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Romania has as objective to reach a deficit of 1.5% of GDP on a medium and long term but it started on a trend of accelerated  growth, stated the economist Aurelian Dochia.

According to him, the reduction of the deficit will be difficult to make next year.

‘We have the objective to reach a level of 1.5% of deficit from the  GDP on medium and long term and starting last year and during this year we have started a trend of accelerated growth of the deficit. We  started from 1% two years ago up to 3% this year. It is an accelerated growth and what is important, it that this growth comes at a moment when the economy growth with high rate, of 7% on  2017. If the moment the economy growth by 7%, you grow the deficit and double  it, it means you have  a problem and it is dangerous that when the economic growth stabilises and you don’t have 7% anymore – when it comes back to the normal of 4% - 5% let’s say – obviously under these conditions we will not be able to meet the target of 3% which Romania, as a member state of the European Union should observe it’ said Aurelian Dochia, asked about the proposal of the European Commission regarding a structural adjustment of 0.8% of  GDP in 2018’.

He explained that, in the case where Romania will have this year a deficit of 3% of GDP in 2018 it will be reduced by 0.8%.

‘It will be very difficult that next year to have a reduction of the budgetary deficit as the majority of the expenses are already compulsory. You cannot make reductions  of budgetary expenses when everything is connected to salaries, pensions, social aid and so on. Those connected to investments, which usually are sacrificed, have already been reduced this year. You don’t have what to cut and then I think the government will have a problem to meet the target of 3%. It seems that next year we will  surpass the target of 3% of GDP’ Aurelian Dochia said.

The European Commission has established that Romania did not take the efficient  measures following the recommendations of the Council of June and as a consequence, they propose to the European Council to adopt a revised version of the recommendation addressed to the country to correct its significant deviation from the  target of adjusting with a view to reaching the budgetary objective on medium term, shows the press release of the community executive.

Romania has to report to the European Council in April 2018 the actions adopted by the authorities as an answer to the new recommendations of the Commission.

The Commission establishes the economic and social priorities of the EU for next year,  formulates the recommendations  for the euro zone policies and finalises the evaluation of the  drafts for budgetary plans of the member states in the euro zone.

According to the autumn economic  estimates published at the end of last week by the community executive, in Romania the public deficit would reach 3% of GDP in 2017 so that in 2018 it reaches 3.9%  of GDP and  4.1%  in 2019.

EC estimates, on the other hand, that the Romanian economy would have an advance of 5.7% in 2017, with significant growth against the estimates included in the spring estimates which indicated an advance of GDP of 4.3%.



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