The Romanian Fiscal Council issued a positive opinion on the 2021 budget planning drafted by the Government.

The budget deficit targets, both under the national (7.16% of GDP) and ESA (8.2% of GDP), are feasible, and the economic growth assumed by the Government (4.3% in 2021) is in line with the 4-5% range estimated by the Fiscal Council.

Furthermore, the Council validates the Government's moderate approach as regards the needed fiscal consolidation.

"[It] corresponds to a rational approach, which allows consolidating the economic recovery initiated at the end of 2020. The Fiscal Council has supported the gradual consolidation of the budget deficit in its analyzes and opinions," reads the Fiscal Council's opinion, quoted by Economica.net.

While under the national methodology, the fiscal consolidation (2.63pp) is quite significant, under the ESA methodology, the consolidation is less impressive: 0.87pp - because part of the revenues this year are deferred payments related to last year's economic activity.

Also on the downside, the Fiscal Council's document highlights the low level of tax revenues (25.3% of GDP) and overall budget revenues (31% of GDP). These values, among the smallest in the EU, indicate the fragility of the public finance position at the end of 2020. 

iulian@romania-insider.com

(Photo source: Pixabay.com)