Bolojan: A deficit of 8.4%, agreed with EC representatives; next year, deficit could reach 6% of GDP

Romania is expected to have a budget deficit of 8.4% of GDP this year, according to what was agreed with the European Commission representatives, Prime Minister Ilie Bolojan declared on Wednesday.The adopted fiscal packages will have an effect of 0.6 - 0.7% of GDP this year, but will increase to over 2.5% of GDP next year, the prime minister said in a press conference held at Victoria Palace.Ilie Bolojan mentioned that on Monday, in Brussels, he had three important meetings: with the European Commissioner for Economy and Productivity, Valdis Dombrovskis, with the European Commissioner for Defense and Space, Andrius Kubilius, as well as with the Vice-President of the European Commission, Roxana Minzatu."At the meeting with the Commissioner for Economy, the budget and European funds aspects were discussed, on the PNRR component. Based on the discussions that took place in the preceding weeks between the technical teams of the Ministry of Finance and those of the Commission, we agreed on a deficit with which Romania would close this year of 8.4% of GDP. This means a deficit of approximately 159 billion RON, which represents almost 32 billion euros. This means that the expected effects of the packages that were adopted this year will be approximately 0.6 - 0.7% of GDP. This is because this year the effects are only on the last three-four months and, by annualization, they are greatly reduced. And next year the effects of the measures would be over 2.5% of GDP," the prime minister said.He added that, if Romania meets the deficit target of 8.4% this year, next year it could approach a target of just over 6% of GDP. In this way, our country would enter a "normal trajectory", in which primary expenditures would constantly decrease."The main influence of this budget amendment and this 8.4% deficit is the increase in the cost related to interest. Initially, a cost of a little over 40 billion RON was estimated. In an assessment this fall, the cost will exceed 50 billion. This is the main influence related to the deficit component. The Commissioner and the Commission team understood the measures that were taken by Romania and their importance, but also the difficult budgetary situation we find ourselves in. We could not consider this understanding to be a fait accompli, except under the conditions in which we respect budgetary discipline, both this year and next year. We will seriously continue the reforms that must take into account the decrease in expenses and a more efficient state. And also to maintain political stability," Bolojan specified.   At the beginning of next week, at the latest on Tuesday, the Government will be convened in an extraordinary meeting to approve the budget rectification, announced Prime Minister Ilie Bolojan."Regarding the Government's activity these days, an important thing is the budget rectification. This rectification will be started, practically, during tomorrow and at the latest on Friday morning it will be published in decisional transparency for consultation. It will be within the lines that I presented and will be detailed by Minister Nazare as soon as it is publicly communicated, specifying the most important amounts that are allocated and the financial movements that are ensured following this rectification. This would mean that at the beginning of next week, at the latest on Tuesday, the Government would be convened in an extraordinary meeting and we would approve the budget rectification, in such a way as to ensure current payments, to complete the necessary amounts for social assistance and other areas, including a slight additional amount for the investment component", Ilie Bolojan told a Wednesday's press conference at Victoria Palace.According to the Prime Minister, this budget rectification is quite tense, considering the pressure coming from the investment area."We over-contracted significant amounts on projects from European funds. Basically, we doubled the amounts that were allocated to us, instead of a little over 20 billion euros in grants and loans, the signed contracts were approximately 40 billion euros, if we subtract those that were terminated, so where contracts were not signed. This means strong pressures on the budget, both this year and next year. And in order for us to be able to allocate additional amounts to the investment component next year, mainly on over-contracting from the PNRR, we need to reduce our operating expenses. And, practically, all the money that will be saved additionally next year through spending cuts, through better efficiency, will be allocated to the completion of these investment projects from the PNRR", explained Bolojan.   Prime Minister Ilie Bolojan also stated on Wednesday that he will remain in office as long as he can do something relevant."Obviously, and this is my expectation, because the Government has drawn up the drafts seeking to observe all constitutional requirements, we are awaiting the Constitutional Court's decision on the new deadline for the postponed projects, but we are confident that the drafts comply with (...) the constitutional provisions, but the Court will, of course, make its ruling as it sees fit. I have constantly seen discussions related to the resignation, but that is not what I am thinking about right now, I am thinking about the measures we need to take in the coming period, how to get our country back on track, how to develop, and political stability plays an important role in this thing," PM Bolojan told a news conference at the Victoria Palace, when asked whether he would maintain his position of resigning, as he suggested in some previous statements, in the event that the Constitutional Court of Romania (CCR) rules as unconstitutional any of the draft laws included in the second reform package.He mentioned that he will remain in office as long as he can do something relevant and will announce if he ever decides to resign."I have said and continue to say that I will remain in this office as long as I can do something relevant. If I ever decide to resign, I will inform you, there is no need to ask me the same question at every meeting or to speculate," PM Bolojan told journalists.  (Photo: https://gov.ro/)