According to the calculations of the European Commission and European Central Bank, Romania’s budget gap will be around 3.6% of the GDP in 2012, said Lazea.
Moreover, the estimate for economic growth in 2012 might have to be significantly revised downward, to 2.5% from the current 3.5-4%, given the international context and the weaker “traction” of exports, meaning the budget gap would be around 4.2% of GDP, according to ESA methodology.
If financial markets remain “nervous,” this state could transfer to the domestic market, which would make financing deficit very expensive and increase interest spending.
“Because of all these reasons, the Government should urgently take additional measures to reduce the deficit by about 1% of GDP,” said Lazea.
The central bank official showed that the best way to do so would be to raise property taxes, which currently provide the budget with only 0.4% of GDP. Tripling these taxes would bring them in line with those in other Central and Eastern Europe states.
According to the fiscal-budgetary strategy approved recently by the Government, the budget deficit according to ESA methodology is to drop to 4.4% of GDP this year, 3% in 2012, 2.5% in 2023 and 2.2% of GDP in 2014.
Lazea said the Government’s intention to keep a tight salary and pension policy in the next three years, despite the upcoming election year, is commendable, but it must have a “Plan B” ready to cope with potential risks.
He pointed out that the statements were his personal opinion, not the central bank’s official position.