Neoliberal policy of the Romanian government: Excessive deficit and public debt 10% higher than in 2018

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By Constantin Radut
The newly installed government in Bucharest, from the National Liberal Party, today made public its first measures for economic policy in 2020 and 2021.
The draft budget for next year is surprisingly unfortunate for the image of solid economy that Romania showed until 2019. The Ministry of Finance, as well as the Prime Minister, prove dilettantism, incoherence and incompetence in coordinating the country’s economy.
For example, the deficit of the consolidated general budget for the coming year is estimated at 3.6% of GDP, and in 2021 it will be reduced to 3.34%. Is the Treaty of Maastricht no longer respected?
The draft budget for 2020 shows that the ceiling for public debt is set at 45% of GDP, with 10% more than it was at the end of 2018 and with 11% as it was for six months of 2019. How did they reach at these conclusions the liberal government in Bucharest?
Maybe the multinationals operating in Romania want all their profits to be outsourced, in order not to pay taxes in the country of residence.
“The ceiling of the balance of the general consolidated budget, expressed as a percentage in the gross domestic product, is in 2020 of -3.60%, and in 2021 of -3.34%. The ceiling of the personnel expenses of the general consolidated budget, expressed as a percentage in gross domestic product is 9.7% in 2020 and 9.4% in 2021. The ceiling on public debt, according to the methodology of the European Union for the end of 2020, is 45% of gross domestic product “, it is specified in project.
The increasing the excise duty on cigarettes, eliminating the VAT breakdown mechanism, prohibiting the accumulation of pension and salary in public institutions and ensuring 2% of GDP for Defense are among the measures envisaged by the Ministry of Public Finance in estimating the revenue and expenditure for the period 2020- 2022.
Other sources of growth of state budget revenues are not mentioned. There is no insistence on the fast attracting of European funds, it is not mentioned the possibility of increasing the VAT revenues and other non-fiscal taxes, of a higher rate of collection of taxes from the big taxpayers.
“The budgetary construction for 2020 is based on maintaining economic growth around the average of 4% over the medium term, given that most domestic and foreign financial institutions anticipate a slowdown in the growth of Central and Eastern European states. Externally, especially for the Euro area, target for 2020 an economic dynamic similar to the one for 2019, which represents a moderate stimulus for the Romanian exports. The unfavorable evolution of the industry in 2019 affected the sectors integrated in the European production chains and there is no only a decrease of the production, as well as the number of employees in the industry including in Romania, where, however, this evolution was more than offset by the increases in services and constructions, all these elements confirm the need to maintain internal economic balances within adequate limits, but and reducing uncertainty associated with the implemented policies “, is shown in the explanatory statement.

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