Over the medium term, fiscal deficits will remain elevated in Romania: 4.7% of GDP (cash basis) in 2024, compared to the 2.9% target set by the Government, according to the World Bank’s Regional Economic Update.

Fiscal consolidation efforts remain critical, and they should address the large structural deficit - which requires reforms to strengthen revenue mobilization and increase spending efficiency, the WB points out.

This year, the public deficit is seen at 6.6% of GDP, 0.8pp above the 5.8% target.

The sizable funds expected under the Resilience and Recovery Facility, the multiannual financial framework 2021-2027, and other EU-funded programs should alleviate some of the fiscal pressures resulting from the war and heightened energy and food prices, the WB reasons, envisaging gradual shrinking of the public gap.

As for the general forecast, the WB sees Romania’s economy growing by 4.6% this year (and notably by 3.2% in 2023), with projections subject to a high degree of uncertainty. A global slowdown and a possible recession in the main trading partners could impact Romania’s growth in 2023.

iulian@romania-insider.com

(Photo source: Deanpictures/Dreamstime.com)