Page 147 - SE Outlook Regions 2023

government plans a high level of capital investments in 2023 in the
amount of €790mn including intensification of energy and utility
infrastructure projects.

The IMF said that public debt is set to slightly increase in 2023-25, with
still high fiscal deficits offsetting a still favorable interest-growth rate
differential, before gradually declining in the outer years. The authorities
are committed to consolidate over the medium term, which would place
debt more firmly on a downward path.

4.9 Budget and debt - Romania

Already placed under the Excessive Deficit Procedure since before the
COVID-19 crisis that froze the procedure, Romania seeks to bring the
general government budget deficit down to 4.4% of GDP in 2023 from
an estimated 5.7%-of-GDP gap in 2022, according to the draft budget
published by the Ministry of Finance.

The Fiscal Council, however, estimates that the budget for 2023 will
result in a cash deficit of around 5.7% of GDP.

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

The country seeks to make a significant 2.8%-of-GDP fiscal
consolidation (2024 vs. 2022) but also boost public investments to an
average of 6.8% of GDP from 6.2% of GDP this year and around 5% of
GDP in 2020-2021.

Speaking of the growth outlook, Finance Minister Adrian Caciu said that
the country’s hoped-for Schengen membership would have added
0.5pp to its growth rate over a ten-year period, while entering the OECD
would make a much stronger contribution.

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

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

147 SE Outlook 2023 www.intellinews.com