The government cannot build the 2012 budget without the recommendations of the International Monetary Fund, which will not arrive in Bucharest any sooner than October 25, so that it took upon itself to break the legal obligation to send the budget draft to the Parliament by mid October so as to allow it enough time for debate.
After the IMF announced a halving of the economic growth forecast to about 2%, the Finance Ministry has to redo next year’s budget draft. The downward economic growth forecast revision will also lead to a decline in budget revenue and in spending, too. The scenario of a relapse into recession is talked about again, which induced a new wave of pessimism among business circles.
Risk of spillovers from the economies in the euro zone prompted BCR, the largest bank in Romania to cut the 2012 economic growth forecast again by one percent from 2.9% to 1.9%, while 2013’s forecast was adjusted from 3.6% to 2.8%.
The government is incapable of coming up with forecasts it can justify and give credibility to and as such is waiting for the IMF and the European Commission experts to come and do the sums and create a budget for it.
Business people are eagerly awaiting the budget, which they use as reference took to build their own budgets for next year. Without knowing what macroeconomic indicators to rely on, and what are the premises the authorities take into account, the business people have their business plans frozen.
(English version by Loredana Fratila-Cristescu)