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Daniel Daianu: the macroeconomic challenge in the years to come is the correction of the budgetary deficit
The big macroeconomic challenge in the years to come is the correction of the budgetary deficit, macroeconomic imbalances, and the European funds have a key role to make the correction easy, considers Daniel Daianu, the BNR governor adviser, in an article published on the blog OpiniiBNR.ro
According to him, in the months to come the European institutions must finalise the EU Budget
for the period 2021-2027 and the Recovery Plan. The two will add, probably, 1,850 billion euro,
out of which Romania will have allocated almost 80 billion euro. If the contribution to the EU budget is lowered, it would be approximately 60 bilion euro, out of which 16.7 bilion would be super-cheap loans – which benefit from the EU rating ( that of Germany as main factor).
In this context, the BNR governor advisor shows that what is important now is the way in which you could put to value the European resources which, excluding the contribution to the joint budget, means ove 30% of the present GDP of Romania.
Daianu thinks that Romania has started the fight against Covid-19 with a major macroeconomic
handicap: the budgetary deficit ( European standard ESA) of 4.3% of GDP in 2019, while the
structural deficit ( over 4% of GDP in 2019) and the primary one ( over 3% of GDP in 2019) are
among the most serious in the EU. In the context, Daianu reminds that, in April 2020, despite
the pandemics and the temporary suspension of the fiscal regulations in the EU, the European
Commission started the procedure for excessive deficit (EDP).
Daianu explained the fact that, while the big growth of budgetary deficit of other states in the EU are caused by the effects of the pandemics, almost half of the probable deficit in Romania is
connected to the structural budgetary deficit. He says that, an increase of the permanent expenses would increase this share. On the other hand, the current account deficit shows a deterioration of financing, with focus on the growing flows on debt, mainly in foreign currency, with the respective risks. ‘ And as for the current account deficit (4.6% of GDP in 2019) we have the most unfavourable situation in the region over the last years’, Daniel Daianu said.
Daniel Daianu shows, that the European money, if they support structural reforms and the
better governance of the public sector, the development of competitive advantages increase
the potential GDP. It is vital that the absorption of European funds be as high as possible in the years to come to have macroeconomic correction. To focus on the resources in the Recovery Plan which should be used mainly between 2021 – 2023.The experience of the previous years demand attention, but we have to manage as well as possible in the financial programme’ Daniel Daianu said.