Romania seeks to bring the general government budget deficit down to 4.4% of GDP next year from an estimated 5.7%-of-GDP gap in 2022, according to the budget planning draft published by the Ministry of Finance on December 6.

The medium-term budget strategy published along with the 2023 budget planning pledges robust public investments and promises to encourage local investors as a means to sustain economic growth.

Speaking of the growth outlook, finance minister Adrian Caciu said that the country’s Schengen membership would add 0.5pp to its growth rate over ten years, while the OECD would make a much stronger contribution.

The budget planning for 2023 is drafted based on assumptions of moderate 2.8% GDP (compared to 1.8% projected by the EC under the Autumn Forecast) growth and still significant 9.6% average inflation (10.2% under the Autumn Forecast).

The public deficit would come under the 3%-of-GDP threshold in 2024, helped by resumed economic growth (+4.8%).

The budget planning for 2023 and the medium-term strategy for the period 2024-2025 envisages fiscal consolidation “through a sustainable and balanced effort, which does not impair the Government’s capacity to support the economy and promote investments,” including moderate growth of the current expenditure on the one hand and relentless efforts to improve revenue collection on the other, the document reads.

The volume of public investments is planned at 7.22% of GDP in 2023, to reach 7.7% of GDP in 2026 compared to around 5% of GDP in 2020-2021 and an estimated value of 6.24% this year.

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iulian@romania-insider.com