IMF says Romania's fiscal deficit in 2021, estimated at 6.8 pct of GDP, below authorities' target

Romania's fiscal deficit in 2021 is estimated at 6.8 pct of GDP, below the target set by the authorities, of 7.2 pct of GDP, the International Monetary Fund states in the conclusions published following the virtual mission to evaluate the Romanian economy, agerpres reports.

According to the document published by the international financial institution, the 2021 budget ensures further support for recovery, while laying the foundations for the reconstruction of fiscal space, so that the Government can again protect the population's revenues the next time an economic disaster occurs.

Budgetary expenditure has shifted to investment, including on the basis of EU funds, which should boost Romania's medium-term economic capacity to create jobs and generate revenue. This reorientation also reflects a welcome moderation in the increase in public sector wages and pensions. Furthermore, it will also be important to ensure sufficient resources to protect the most vulnerable households. The economic recovery in recent months, above the expected level, has helped the fiscal outlook. The resulting additional revenue should be saved. On this grounds, the fiscal deficit in 2021 is now estimated at 6.8 pct of GDP, below the budget deficit target set by the authorities of 7.2 pct of GDP, the release by the IMF following the conclusion of the consultations on Article IV, reads.

However, on the other hand, the institution's experts say that, as the recovery escalates, policy efforts should focus on fiscal-structural reforms aimed at helping to rebuild the necessary medium-term fiscal management space and to comply with EU rules.

Also, strengthening income management is essential for increasing the level of tax collection up to EU levels.