The increase of electricity prices and therefore of utility bills will create more problems, since these bills have to be subsidized.
“In that context as well, the fiscal policy stance, presumed to become restrictive starting 2021, was considered a matter of concern, as the coordinates of the recent budget revision and the domestic political instability were likely to jeopardize budget consolidation, several members pointed out. Specifically, budget consolidation was seen as key for external imbalance correction and also necessary in terms of the commitments made under the excessive deficit procedure,” the central bank’s release said.
“It was deemed that additional uncertainties and risks surrounding public finance stemmed from the large volume of permanent expenditures and from the surge in the prices of energy and building materials, but also from potential approaches meant to cushion the impact of some costlier utilities, primarily for households, as well as from new government measures warranted by the abrupt worsening of the epidemiological situation.”
(English version by Loredana Fratila-Cristescu)