Romanian FinMin says budget deficit in January-May was anticipated

FinMin Eugen Teodorovici said that the budget deficit seen in January-May, at RON14.7bn (1.4% of GDP) was in line with expectations, he told Antena 3, a TV channel. He argued that there were plenty of new policies in place, like hikes of public sector wages and pensions, as well as higher public investment, which had caused the considerable increase in deficit (by about 80% y/y). He emphasized there was no threat for budget execution and that the government was in full capacity to cover current spending. Yet, he admitted that there may be overblown expenses in certain areas, particularly the public administration, where he doesn’t see the need for so many employees.

Teodorivici gave the economy ministry as an example, arguing that there were plenty of departments that were unnecessary, and others that had too much staff and so there wasn’t enough work to occupy them at full working day. He didn’t point to specific departments or agencies, but said that there could be done more in order to optimize public spending. He implied that such measures could be envisaged in a budget revision that was currently under preparation. However, Teodorovici didn’t share any details. At this point, a budget revision may be necessary if only to make sure that fiscal targets are met, since revenues have not quite increased at the desired place, even though they rose at a stronger rate than in peer countries. Still, the odds are that with that rate of spending, the general government deficit will certainly exceed 3% of GDP, something that the government would prefer to avoid.

 

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