Romanian government promises more public spending but smaller deficit for 2024

Romania’s government will publish the 2024 budget planning for public debates on December 18, and it will envisage a deficit “at least 0.5 percentage points (pp) below the deficit in 2023, therefore under 5% of GDP,” prime minister Marcel Ciolacu announced.

The budget planning will be endorsed by the executive on December 21, and by the lawmakers by the end of the year, he also said, quoted by Ziarul Financiar.

The executive announced that public spending in key areas will increase faster than nominal GDP, but the deficit will decrease to under 5% of GDP. Although this is a modest target, it is not feasible without a further fiscal corrective package in the context of supplementary public spending – a delicate and not quite plausible mission in the context of general and local elections.

Among the figures announced by PM Colacu, the Ministry of Education will get 60% more money, namely a record 4.1% of GDP – with part of the money coming from the Resilience Facility. School teachers’ wages will increase by 13% in January and 7% in September.

The capital expenditures will also reach a record 7.1% of GDP. This includes 60% more funds for the Ministry of Development – the source of funding local administration’s investment projects. The budgets of the Ministries of Transport and Health will increase by 30% and 26%, respectively.

The public pensions will increase by 14% in January and by an average of 40% in September. For comparison, the GDP is expected to increase by 10%, nominally, in 2024 compared to 2023.

The additional funds will be provided, the prime minister explained, from economic growth, from improving the collection of state revenues and from better management of health funds.

(Photo source: Inquam Photos/George Calin)