Romania posts 4.6%-of-GDP public deficit in 2019

Romania’s public deficit hit 4.6% of GDP in 2019, finance minister Florin Citu said in a press conference on January 28.

Since the gap was already 3% of GDP in 2018 (according to the European Union’s methodology) and there are no fiscal consolidation measures set in place yet, the European Commission should, in principle, activate the Excessive Deficit Procedure for Romania.

The deficit last year was 0.2% of GDP above that projected by the new Liberal Government on the occasion of the budget revision in November, mainly because of unexpected events including the payment of the historic debt owed to Romanian-Swedish investors Ioan and Viorel Micula and lower extra dividends disbursed by state controlled companies, minister Citu explained, according to local News.ro.

“There is a court decision, the amount had to be paid,” Citu said, speaking of the debt paid to the Micula brothers - some RON 910 million (EUR 190 mln, 0.09% of GDP).

The volume of dividends paid by the state controlled companies was RON 1.3 bln (EUR 270 mln, 0.12% of GDP).

“We wanted to be a fair partner, as a state, and to pay the outstanding bills in November and December. You cannot demand, as a state, fairness from private companies, if you do not pay your debts,” said the minister. He recalled that in previous years, the deficit target was reached by postponing the outstanding payments, especially in the last two months of the year.

Romania’s Liberal Government targets 3.6%-of-GDP deficit this year, but the Fiscal Council estimates a gap in the range of 4.6%-4.8% of GDP, assuming full enforcement of the 40% pension hike in September.

(Photo source: Inquam Photos/Octav Ganea)