With the latest figures on the table and much more familiar with the national accounts than seven or eight months ago, the government is now less optimistic.
The revised fiscal-budgetary strategy anticipates an average GDP growth rate of 2.2% per year until 2015 from 3%-4% last summer. The strategy halves the export rise forecast, relies on lower revenues and higher budget deficits.
Economic analyst Aurelian Dochia says the revision of targets under the new strategy is rooted in last year’s election period, when the tendency to set very high standards is very common.
“In practice, such targets are impossible to attain and when faced with reality, one becomes more realistic. In fact, each of the last few years started out with optimistic figures, which were then repeatedly revised down. But this happens everywhere, not just in Romania.”
Dochia believes it is prudent to have lower expectations and get better-than-expected results than to have big plans and then make adjustments that are difficult to explain and to harmonize with various projects and interest groups.
The revised 2013-2015 fiscal-budgetary strategy published by the Finance Ministry on Wednesday not only revises the 2012 GDP growth rate, to just 0.2% from 1.7%, but also cuts predictions for the future – growth of 1.6% in 2013 (that this year’s budget has in fact been built on), of 2.2% in 2014 (down from 3.6%) and of 2.8% in 2015 (from 3.9%). In addition, as turmoil lingers in Europe, anticipations as to the exports growth rate have fallen from 9.5% to 3.3% for this year and from 11.2% to just 4.8% in 2014.
According to the strategy, fiscal consolidation will continue, though not through drastic spending cuts, but by increasing the share of revenues to GDP.
“The strategy takes into account the current circumstances, with Europe still going down. I hope this strategy is pessimistic, not realistic. It is a very leftist perspective, based on boosting the revenue base,” says economic analyst Dragos Cabat, who adds that he does not see how this could be achieved.
“Hiking excises and taxes is something that will turn against the authorities. You give money to public sector employees who go on to spend it on more expensive energy and on products with higher excises,” he adds.
(English version by Daniela Stoican)