UniCredit Romania expects country's public deficit above 8% of GDP this year
<p>Although the Romanian government is preparing two additional extensive reform packages, targeting mainly the spending cuts and a higher efficiency in the public administration, the 7% of GDP target for this year will not be met, with a level above 8% of GDP more likely, according to a research report by UniCredit Romania.&nbsp;</p>

<p>"Yet, we do not expect this to trigger rating actions, with attention shifting towards meeting the 2026 deficit target of 6.4% of GDP," the report reads.</p>

<p>"We believe the 8%-of-GDP target is still feasible under cash terms, although this might be achieved at the expense of public investments," it adds.</p>

<p>In contrast, meeting the 6.4%-of-GDP target in 2026 (which would bring the country's deficit on the fiscal consolidation trajectory agreed with the EC) is a much higher challenge, as keeping the pensions and public wages unchanged during the entire year would generate enormous social tensions in the context of the rising prices.&nbsp;</p>

<p>Failure in implementing the reforms in state-owned enterprises and the local administration would reduce the fiscal space the government needs to deliver limited wage and pension hikes, while failure to address the special pensions' issue would further aggravate public frustration.</p>

<p><em>iulian@romania-insider.com</em></p>

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