The 2021 budget under debate

Romania's 2021 budget law is focused on investment. Lawmakers also want to reform loss-incurring companies

Corina Cristea, 15.02.2021, 14:00

Lawmakers in Bucharest want to
adopt the 2021 budget law within less than a week. The law was submitted to
Parliament for debate last week, in addition to other related laws, including
an emergency decree on cutting holiday vouchers for public sector employees and
capping pensions at the level reported last year. The context isn’t great,
considering the pandemic has pushed Romania into an excessive deficit
procedure, while the healthcare system continues to eat up considerable funds.
Lawmakers also need to make sure the business sector is not affected too much.
The Government says the budget law will allow for a multiannual approach to
reforms and public finance, by reducing the budget deficit gradually, from
7.16% to 3.4% in 2024. The law is focused on investment, which will get 5.5% of
the GDP, the largest allocation so far. The law also enjoys the support of the
European Commission, which is due to disburse a large amount of funds to
Romania devoted to reforms and investments, Prime Minister Florin Cîțu has
said. The Prime Minister expects results from the ministries that asked for
larger budgets than in previous years.

We will be using mid-term
indicators to make an assessment of the budget execution. The same happened in
previous years, with sectors getting large funds and failing the execute their
budget. We will also be have a discussion at the end of the first half of the
year, and some Ministers might leave. We agreed to increase the budget, we have
a large number of expenses to support, but I would also like to see more
results. I want to see reforms at the level of state-owned enterprises.

The Social-Democrats in opposition
have accused the Government of poor allocation of funds this year. They claim
the funds stipulated in the law will cover just the first nine months, and that
additional taxes will be introduced. Social-Democrat Senator Radu Oprea said
his party intends to vote against the law in Parliament, and will advance
amendments that will offer solutions for economic recovery and increasing
living standards, while observing the set budget deficit target. According to
the European Commission’s economic forecast published last week, Romania’s
economy will recover in 2021 after shrinking by 5% in 2020. The engine for
growth this year will be private consumption and investment, determining a 3.8%
growth of the GDP in 2021 and a 4% growth rate in 2022. The Commission also
expects exports to recover against the backdrop of an improvement in the performance
of the main economic operators. (V. Palcu)