Romania’s lawmakers to return 2019 budget law unchanged to President

Romania’s Parliament might vote the 2019 budget law on March 13 and return it to the Presidency quickly, the president of the senior ruling party - the Social Democratic Party (PSD), Liviu Dragnea, said, implying that no amendment would be made on the bill whatsoever, local Mediafax reported.

Dragnea had previously defended the 2019 budget planning stressing that no change was needed.

Romania’s president Klaus Iohannis returned the 2019 budget bill to the Parliament on March 6 arguing that “it is not good enough” after the Constitutional Court found no problem with the state budget law. The Constitutional Court only found issues with the general government expenditures and deficit caps, after the lawmakers approved higher children allowances. But the Government will pass an emergency ordinance to bring the new caps in line with the lawmakers’ requirements, which result in a 0.21%-of-GDP supplementary deficit of the general government budget, Dragnea assured.

However, the budget planning as passed by Parliament is not consistent with the 2018 budget estimates (nominal GDP) and modest consensus expectations for the GDP growth this year. The combined effect of these two elements will be a 2019 nominal GDP significantly smaller than envisaged by the Government, and consequently a wider deficit-to-GDP ratio (as compared to the 2.76% target). The country’s largest bank, Banca Transilvania, expects 2.8% GDP growth this year, half of the 5.5% projected by the Government.

Furthermore, the Government plans to bring big state energy companies together in an Investment Fund, with the result of the Government losing dividend revenues worth some EUR 1 billion (0.5% of GDP). The budgetary impact of the investment fund was not considered when the Government estimated the budget revenues for this year.

(Photo source: Presidency.ro)