Romania’s President Klaus Iohannis on December 28 promulgated the Budget Law for 2022 after the Constitutional Court rejected the objections expressed by the reformist party USR. 

The Government targets a deficit of 5.8%-of-GDP in cash terms and 6.2% under ESA (accrual basis) in 2022, a target that is seen as “challenging” by the Fiscal Council. Under the Excessive Deficit Procedure, the country has to bring the gap (under both expressions) under 3% of GDP by 2024. In 2021, the gap is planned at 7.1% of GDP under cash terms and 8.2% under ESA, but it might eventually be even smaller. In 2022, however, the Government will no longer benefit from the one-off revenues derived from the deferred tax payments allowed by the Executive in 2020 during the toughest episode of the Covid-19 crisis. 

The Fiscal Council’s concerns related to the Government overestimating the revenues is “legitimate criticism”, minister of finance Adrian Caciu admitted, adding that the Executive was the mission to demonstrate the opposite. 

The Fiscal Council estimates that the revenues will fall some RON 12.5 bln (EUR 2.5 bln, 1% of GDP) short of the target. It’s not normal to ink in the Budget Law a desire for better tax collection, Council’s head Daniel Daianu commented.

Separately, the reformist party USR referred the bill to the Constitutional Court on grounds that it provides for the disbursement of funds to a party (PPU-SL, founded by controversial businessman Dan Voiculescu) in breach of Law 334/2006 on financing political parties. The Court, however, explained that the financing can take place only after Law 334 is amended such as to allow the disbursement. PPU-SL obtained only 1% of the votes in the general elections of 2020, but it has four MPs that ran on the lists of the Social Democratic Party (PSD). 

editor@romania-insider.com

(Photo source: Presidency.ro)