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Ionut Dumitru (Fiscal Council): Budget deficit will exceed IMF estimates after salary law passes
Budget deficit will grow after passing salary law, exceeding estimates announced by IMF on Thursday (3.7% in 2017 and 3.9% in 2018), Ionut Dumitru, the president of the Fiscal Council told Mediafax.
“It is a signal drawn by an independent institution about the significant risk of budget slide. IMF estimates are not a surprise as they are close to those of the Fiscal Council. The IMF budget projections include only what is being voted now. If we consider the budget effect of the salary law, IMF representatives speak about an impact of over 6% of GDP, which was not included in the annual projection announced on Thursday. Estimates about the 3.7% deficit this year, 3.9% in 2018 are made by IMF only on what is being voted now,” said Ionut Dumitru.
Budget deficit will grow over the figures announced by IMF on Thursday, after the voting of the salary law and after modifying the taxing system (introduction of household tax).
IMF warned on Thursday that budget deficit will reach 3.7% of GDP in 2017 and 3.9% in 2018 and measures to reduce it are necessary.
“The main risks for economic prospects have in view to reduce fiscal prudence, which may affect market confidence negatively. That, together with increased political tensions may erode consumption and investments, increase the cost of government loans and could exert pressure on the exchange rate, which may affect bank balance sheets by exposing them in foreign currency. Maintaining adequate reserve levels, a flexible exchange rate and fiscal reserves will contribute to fighting those risks. Prudent economic policies and visible steps to accelerate the rate of structural signal about Romania as a good place for doing business,” according to the report made public by IMF on Thursday.