RO Govt., central bank “found solutions” to finance deficit, president Iohannis says

“We have found solutions for each problem,” namely financing the public deficit and encouraging the economy, president Klaus Iohannis said on May 8, quoted by Adevarul.

The president had a meeting prime minister Ludovic Orban and central bank governor Mugur Isarescu to discuss economic reconstruction plans. Finance minister Florin Citu and presidential adviser Cosmin Marinescu also participated.

After the meeting, president Iohannis conveyed a very optimistic message, implying that the economy “never stopped” hence it needs not a restart but needs to be encouraged.

First on the agenda seems to have been the financing of the public deficit to accommodate a substantial fiscal stimulus. Still, the sole insight into the solutions found to this problem was that no austerity measure would be pursued.

“We will have a larger [public] deficit than originally planned, and this deficit must be financed. (...)What we all want is good financing for the deficit, so that no further austerity measures are needed,” president Iohannis said. Initially, the Government planned 3.65% of GDP public deficit this year.

However, after the coronavirus pandemic hit Europe and Romania, the Government remade the budget planning based on assumptions of 1.9% GDP decline and envisages 6.7% of GDP public deficit.

The European Commission issued a more pessimistic forecast, though, including a 6% GDP plunge and a 9.25% of GDP budget deficit. Both scenarios include the 40% pension hike scheduled for September.

(Photo: Presidency.ro)