RO Fiscal Council expects 7.3-8.2% of GDP public deficit for 10% pension hike

The public deficit would “not insignificantly” decrease to 7.3-8.2% of GDP under the scenario of a 10% pension hike this September, according to Daniel Daianu, head of the Fiscal Council, Economica.net reported.

This scenario is increasingly likely, as Government officials have introduced it as an alternative to the costly 40% hike provisioned in the Pension Law.

The Fiscal Council’s head warned that there is a tendency, including among economists, of overlooking the public financing issue.

Under the 40% pension hike scenario, the Fiscal Council expects the budget deficit to hit 8-9% of GDP for a 4-6% GDP decline and 9-10.4% for 8-9% GDP decline, Daianu said.

The full-year impact of the 40% pension hike is estimated at some 2.5% of GDP.

Daianu ruled out as unrealistic the 1.9% GDP decline used by the Government when remaking the budget planning for this year, with a deficit target of 6.7% of GDP.

(Photo: Adrian Grycuk/ Wikipedia)