Romania‘s president Klaus Iohannis on Tuesday evening endorsed the 2022 state budget, which projects a cash deficit equivalent to 5.84% of gross domestic product (GDP) and 4.6% economic growth, his office said, according to See News.
The parliament approved the budget last week with 294 votes in favour and 120 against.
In 2022, public wages and compensations will be frozen at the end-2021 level for all state employees except for those working in social assistance, healthcare and education, according to the bill.
GDP is estimated to grow to RON 1.317 trillion (266 billion euro) next year.
Average inflation is forecast at 6.5% next year. Romania’s consumer prices rose 7.80% year-on-year in November, compared to a 7.94% increase in October, according to the latest data available from the national statistical office.
The budget deficit on a cash basis is estimated at 5.84% of GDP. The deficit under the European System of Accounts (ESA) standards is 6.24% of GDP.
According to the EU’s Maastricht treaty signed in 1992, the ratio of the annual general government deficit relative to GDP at market prices must not exceed 3% at the end of the preceding fiscal year. However, the European Commission said in November that no additional measures need to be taken within the excessive deficit procedure for Romania for the time being but it will reassess the situation once the new government presents the 2022 budget and a medium-term fiscal strategy.
This year, Romania started a fiscal-budgetary consolidation process, which aims at gradually reducing the deficit to 2.02% of GDP in 2025, according to the budget bill.
Next year’s budget revenues are projected at RON 439.9 billion, or 33.4% of GDP, while expenditures are forecast at RON 516.9 billion, or 39.2% of GDP.
Investment spending is seen at RON 88.4 billion in 2022, or 6.7% of GDP.
Romania’s economy contracted by 3.7% in 2020, compared to a growth rate of 4.1% in the previous year and with a consolidated budget deficit equivalent to 9.79% of estimated GDP, compared to a 4.6% gap in 2019.