Romania cannot afford a decrease in tax revenue, as that the consolidation of the public government deficit has to continue, Romania’s Chairman of the Fiscal Council (CF), Daniel Daianu, declared on Wednesday.
„When measures are taken that can probably lead to a decrease in revenues, it is always mandatory to set in place measures to compensate for a likely decrease in revenues. We, in Romania, cannot afford a decrease in tax revenue, even if we have considerable resources from the European Union. Under the Multiannual Financial Framework and what the National Recovery and Resilience Plan includes, you can easily reach 5-6% of the annual gross domestic product. We have to be very thoughtful. For example, the 2023 budget provides for an increase in defence spending by 0.5% of the GDP, which means around RON 7.5 billion. That is a considerable amount. In 2024, we already have to solve an equation that some would call impossible to solve. Why? Because we have to continue the budgetary consolidation, that is, to bring the national government deficit to the programmed target of 4.4%”, responded Daianu when asked if the budget would currently allow tax reduction, including on labor.
While the Romanian economy is slowing down, it will manage avoid recession this year, yet the slowdown in the economy and the 2022 inflation will generate difficulties with budget consolidation.
Regarding expected bank loans and deposits, Daianu said that a faster growth in forex loans than that in the national currency is notable.
„The national bank has for years waged a battle that was not talked about very much, namely to stimulate loans in the local currency. Today we are talking about financial stability in this seminar. An economy that by far depends only on forex loans to fund the budget, individuals or companies is extremely vulnerable, and international financial institutions encourage lending in the local currency”, explained Daianu.