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Daianu: 2021 state budget marks the start of macroeconomic correction in Romania
The 2021 state budget represents the beginning of macroeconomic correction in Romania, and is a rational, not an austerity financial plan, Tax Council chairman Daniel Daianu told a specialist debate on Wednesday.
"The macroeconomic correction is starting this year in Romania, but it must be correlated with the transformation of the economy - speaking about the Green Deal - with overcoming certain development gaps plus the preparation of the entry into the European Exchange Rate Mechanism and the euro area. (...) The macroeconomic correction was supposed to start in 2020, but was stopped by the pandemic, and despite allegations that this is an austerity budget, I say that the 2021 budget is a budget of reason. Comparisons with the 2010 - 2011 budgets that provided for drastic cuts in personal incomes and salaries are a nonsense. I understand political rhetoric, I understand that the budget is discussed in Parliament, but it is good to understand that we could no longer delay the start of a correction. Although the correction on the cash deficit seems considerable, according to the European methodology it is moderate, and this is natural considering that the economy is in a period of convalescence, even if we are talking about recovery. Let us not forget that in 2019 we had a structural deficit of over 5 percent of GDP. We had the largest primary deficit - the one that excludes the public debt service - in the European Union. The structural deficit increased massively last year to over 7 percent of GDP," said Daniel Daianu.
The Tax Council chairman pointed out that the question is how this correction will take place over the next 4 years if budget revenues don't increase.
"The 2021 budget means a change of behavior, because our previous budgets had this procyclical feature. In 2021, by starting the correction, we signal a major change of behavior. It is important to continue, and I think that we will carry on. The big question is how the correction will be done in the next four years, and that is why we also emphasize the need for an increase in budget revenues," Daniel Daianu mentioned.
On the other hand, the Tax Council head said that only Spain would surpass Romania this year in terms of deficit.