70% of economic growth in first three quarters of 2018, obtained by stocks increase. Foreign exchanges pulled down GDP by 1.6 percentage points
INS recalculated GDP in the third quarter and the first three quarters of the year. Here are the growth data for the Romanian economy, updated… Mai mult›
The estimates by economists of most important banks in Romania on the depreciation of the local currency for this year range between 4.73 and 4.77… Mai mult›
Final energy consumption of Romanian industry declined by about 75% between 1990 and 2016, compared to only 25% at the EU level, according to data… Mai mult›
Crash signal in foreign trade – export coverage ratio has fallen to 2011 level. And we do not import robots
The trade deficit on November 2018 was EUR 1.567 billion, the second worst monthly performance registered last year. Worryingly, the growth rate of exports compared… Mai mult›
The Romanian mergers and acquisitions market reached nearly EUR 2 billion in 2018, according to a Deloitte Romania analysis based on public sources and transactions… Mai mult›
de Adrian N Ionescu , 11.6.2018
The recommendation has been issued in the context of the need to focus the tax policy on improving its effectiveness “to support the consolidation and (respectively) improve the structure of the budget” by:
- The efficiency of revenue collection by “rationalizing tax exemptions and reforming tax administration, especially on the VAT side”.
The IMF has inevitably insisted on the priority of restoring the IT infrastructure of the “aging and fragile” tax system, given that the financing approved for this purpose by the World Bank, even since 2013, has NOT led to the necessary reforms.
- The efficiency of spending, especially of large investment projects, which “should be strengthened and reflected in annual budgets”;
- An increased efficiency in the absorption of the European funds, “especially for major infrastructure projects“.
Moreover, “the organizational structure of ANAF needs to be improved in order to produce reforms, by simplifying the legislation and procedures,” the IMF report said.
At the same time, the IMF recommends the compliance with the Fiscal responsibility law, which has not happened so far. The Fiscal Council’s opinion, which identified some major gaps on this matter, “should be better integrated into the process of drafting the budget” (state budget).
The IMF estimates a budget deficit of 3.6% of GDP for 2018 and points out that balancing measures are needed (for increasing the revenues or cutting the expenditure), equivalent to 0.6% of GDP.
Therefore targeting now a budget deficit at the maximum level of 3% is “not sufficiently supported by fiscal measures”, which makes a 2% budget deficit target more appropriate, in line with the position where the economy is on the growth cycle, according to the report.
The table of the Romanian macroeconomic indicators shows:
- postponing or a gradual implementation of the increase in the pension point – with an impact of 0.3% of GDP (cash)
- re-prioritizing the current expenditure (for instance, the centralized procurement system announced in the meanwhile by the Ministry of Finance) – an impact of 0.2% of GDP
- increasing efficiency in the state revenue collection and expanding the tax base -an impact of 0.1% of GDP
- rationalizing the reserve of 10% of the expenditure, set for each ministry – an impact of 0.5% of GDP
- other measures (for instance, increase rhythm in attracting EU funds) – an impact of 0.5% of GDP
The IMF also recommends “the clarification of potential adjustments of Pillar 2 of the (privately-managed) pension system, to eliminate uncertainty.”
Risk of “overheating”
The IMF’s recommendation for the Government to target a 2% budget deficit this year and 1.5% in 2019 comes in the context of the risk for the economy to overheat.
The rapid increase in inflation, as well as the rise in the budget deficit and the current account deficit, the fact that investment remained behind the consumption, and the absorption of the European funds is weak are also “signs of overheating the economy“, on which the IMF management team expressed their “concern”.Under these circumstances, the economy would face higher difficulties in the event of potential “adverse shocks” from outside.
In addition, “there is a risk that the current policy path will increase the macroeconomic volatility, undermine the capacity to resist potential adverse shocks and eventually slow down the convergence toward the advanced EU countries.”
Lăsați un comentariu
Mugur Isarescu: "Ordinance weird thing" reduces monetary policy efficiency, which will not help Government
The National Bank of Romania (BNR) will convoke the National Committee for Macro-prudential Supervision, where the Ministry of Finance will be required to clarify the… Mai mult›
Romania's economy will record an advance of 3.5% in 2019 and 3.1% in 2020, down one percentage point from June 2018 forecast, according to… Mai mult›
The benchmark government bond yield jumped above the 5% threshold on Thursday. The Ministry of Public Finance (MFP) attracted RON 300 million from banks on… Mai mult›
The Ministry of European Funds has taken out Iasi-Tg. Mures highway project from the Large Infrastructure Operational Programme 2021-2027 and the Ministry of Transport already… Mai mult›
Senate postpones discussions on DNA’s request on waiving immunity of Calin Popescu Tariceanu until February 2019
The Senate has decided that it will put to the vote the decision to waive Calin Popescu Tariceanu's immunity only in the spring session, that… Mai mult›
Implementation of 5G technology, a multiplication effect in economy of EUR 4.7 billion - announces Sorin Grindeanu (ANCOM)
The National Authority for Management and Regulation in Communications (ANCOM) launched on Wednesday the National Strategy for the Implementation of 5G Technologies in Romania for… Mai mult›
Some of the amendments to the criminal codes will generate mistrust regarding Romanian state's ability to ensure the legality, stability and predictability of business relationships… Mai mult›
European Semester / European Commission asks Romania to correct its medium-term structural deficit by 1% of GDP
Minister Eugen Teodorovici is pressured by the EU to reduce the budget deficit After finding that the Government has done nothing to adjust the deviation… Mai mult›
The Government adopted on Thursday the ordinance that provides for the general framework for the establishment of a Sovereign Fund. Later, after new talks with… Mai mult›
The representatives of Ford Craiova met on Wednesday with mayors of 30 localities from Dolj county in order to stimulate the attraction of 1,700 new… Mai mult›
Development strategy / Government squeezes even investment money from its own companies: EUR 120 million from only two entities in energy field
Nuclearelectrica (SNN) and Romgaz (SNG) have calculated the additional dividends to be paid to the state after the Ministry of Finance (MFP) sent to the… Mai mult›
DNA, officially: Senate President is suspected of having received a USD 800,000 bribe. Case file opened at a request from Austrian judicial authorities
The case file in which the DNA requested the waiving of the Senate President’s immunity was opened at the request of Austrian judicial authorities and… Mai mult›
Romania has to recover illegal state aid worth EUR 60 million granted to Compexul Energetic Hunedoara, announced the European Commission with a statement released on… Mai mult›
The Ministry of Public Finance (MFP) intends to borrow in November RON 4.74 billion, 1.4% more than in the previous month, according to the Ministry.… Mai mult›