President’s economic advisor: Budget bill is based on overly optimistic macroeconomic predictions

Cosmin Marinescu, an economic advisor to President Klaus Iohannis, held a statement regarding the 2019 budget bill which was recently sent back to Parliament by the president, who deemed it “a national shame”.

Marinescu’s main points:

• Revenues are overestimated by 1 percent of GDP. Fiscal revenues of RON 7.5 billion are based exclusively on promises, while spending is based on certainties.
• VAT revenues are overestimated by RON 5 billion
• In terms of spending, we’re looking at underestimations. For example, pensions were estimated to cost RON 69.3 billion. A week later, they reached RON 68.1 billion, then voted in the Parliament. These numbers must be clarified, as our calculations found that pension spending was underestimated by RON 1.4 billion. We want amounts for paying pensions to be fully included in the budget.
• The budget bill adopted in February shows Romania’s contribution to the EU to be RON 500 million lower.
• Investments: the reduction of capital spending in the local authorities’ budget is eloquent.
• Local authorities’ investments are at a historical minimum of 1.2 percent of GDP. The delay in the budget bill has endangered these investments.
• All social services have been transferred to local authorities, as if there is a desire to leave mayors with less money.
• The higher deficit shows that adjustment with 2018 is practically inexistent, which is against the European Commission’s recommendation to have a structural adjustment of 1 percent of GDP.
• The government keeps postponing its commitments. The current form of the budget raises questions about the upcoming years.
• The Parliament has the duty to present a stable and predictable budget for the years to come.

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