President Klaus Iohannis promulgated the state budget law for 2018, which had received a positive vote from the parliament on December 22.
The budget is based on a predicted economic growth of 5.5 percent, an average annual inflation of 3.1 percent, an average exchange rate of RON 4.55 value for euro, and an average net salary of RON 2.614.
According to the project, the government expects budgetary incomes of RON 287.5 billion, which is RON 30.9 billion higher than in 2017. This year will be the first time when Romania’s GDP will be higher than EUR 200 billion.
The Presidency also published a press release where Klaus Iohannis is expressing worries about some vulnerabilities present in the 2018 budget project, and his call for economic stability, predictability and sustainability.
Iohannis claims that the current budget is not sufficiently credible and balanced, and that there is a risk of overestimating the spending ability which could lead to a negative effect on Romanian citizens’ long-term well-being.
“Our country needs to avoid the trap of an unsustainable economic growth, based mostly on consumption, budgetary deficits and the accumulation of public debt”, Iohannis says.
The president expresses his doubts regarding Romania’s ability to maintain a deficit of less than 3 percent of GDP with the current budget, despite the record economic growth. He thinks that Romania needs to make a very serious effort to impose a fiscal-budgetary discipline, and that the 2018 budget “ignores the need for this change of direction”.
Iohannis believes that the government’s priority should be to significantly improve the level of fiscal collections, in order to be able to sustain the growth in citizens’ incomes. In terms of spending, the President underlines the importance of investments for economic development.