Economist: New RO pension law opens perspective for 5.4% of GDP deficit in 2021

The adoption and enforcement of the new pension law opens the perspective for the increase of Romania’s budget deficit to 5.4% of the gross domestic product (GDP) in 2021, according to BCR chief economist Horia Braun, quoted by Agerpres.

The main theme in the following period is how we can adjust this deficit, Braun said in a press conference.

“From our estimates, the budget deficit will easily pass the 5% of GDP threshold in 2021, somewhere around 5.4%. This is only from the increase in the pension point. We haven’t even considered the increase in the number of retirees,” the BCR economist said.

For next year, Romania should expect a budget deficit of 4% of the GDP, he added. Horia Braun thinks that the adjustments to the budget deficit are at least 2.5% of the GDP and this will be the theme of the next government, even if no politician admits this.

"From 2020 to 2024, this is all everyone will talk about, in my opinion,” Braun said. However, he said the adjustment should be gradual as trying to cut the deficit by 3% of the GDP in one year would push the economy into recession.

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