Romania's economy can still grow by 4% this year, and the public debt to GDP ratio will return to under 50%, minister of finance Adrain Caciu said on an optimistic note at the end of last week.

The consensus forecast has stabilised around a growth rate of 2% this year, with the International Monetary Fund (IMF) projecting 1.9%.

The recession, which does not necessarily mean a negative growth rate for the whole year, is a scenario increasingly seen as likely among analysts.

Speaking about the public debt exceeding 50% of GDP, minister Caciu said that the temporary increase in public debt may also be due to investments. "We do not consider the freezing of salaries in the state system, and the administrative reform is a matter also assumed under the Relaunch and Resilience Plan (PNRR). It will be done by reforms; we have targets and milestones. We can talk about fiscal prudence, not about freezing salaries," Caciu said, quoted by Economedia.ro.

In terms of economic growth, the minister says he maintains his forecast that nominal GDP will be at least at the level at which the budget was built.

Higher than expected inflation may help the Government hit the nominal GDP target. But the real GDP is an entirely different thing, and hopes for real 4% growth are less reasonable. 

(Photo: Antonyesse/ Dreamstime)

andrei@romania-insider.com