So, the only thing that executives can use as reference point are the macroeconomic forecasts included in the latest IMF report.
As in each of the past few years, Romania’s draft budget is late. Prime Minister Victor Ponta had presented a planning back in September. According to this planning, the budget was set to be on the government’s table by October 15, reach Parliament by November 1 and be voted on by December 1. But this deadline has already been exceeded.
Over the years Romanian governments have tended to come up with optimistic draft budgets, overestimating economic growth and budget revenues. The forecasts were subsequently proved wrong and it took very tough measures such as hiking VAT and cutting public sector wages to rebalance the budget.
It is essential to come up with the most accurate forecast possible when building the annual budget.
The deadline for submitting the draft budget to Parliament has been delayed from October 15 to November 15, considering that between October and November the European Commission puts together the autumn forecast with growth predictions for each member country.
But anyway for years the budget is approved the very year when it needs to be enforced.
“We will be ready with our budget at the end of November because we know that there have been delays [with the state budget]. We take macroeconomic indicators into account, but as far a we are concerned, the impact is not that big,” explains Fady Chreih, executive manager of private clinics and hospitals chain Regina Maria. “We are waiting for the state budget on healthcare and to see what the Ministry will do,” he adds.
“Companies have a few rough reference points regarding the level of the budget deficit and the promise taxes will not be raised. Still up for discussion remains the reduction of social contributions and raising the minimum wage to RON1,000,” explains economic analyst Aurelian Dochia.
He says businesspeople have come up with rough budgets, which they can adjust if need be, and that businesspeople no longer rely very much on general budget forecasts.
“Businesspeople look at certain expenditure chapters such as acquisition of goods, as private companies hope to get certain contracts. The private sector is also interested in investments included in the budget,” Dochia says.
Romania’s economy is set to grow 2.2% next year, while its budget deficit will be 2% of GDP, according to IMF estimates. These figures could also feature in the draft budget for 2014.
(English version by Daniela Stoican)