December 18 (SeeNews) - Romania's government on Wednesday approved the 2020 budget bill based on projections for economic growth of 4.1% and targeting cash deficit equivalent to 3.59% of gross domestic product (GDP).
"We are in a critical situation. After three years of legislative and fiscal collapse, in which all the public systems were wrecked and the budget reached a clear imbalance, we must send this signal to society, economy and investors - that our government is determined to take responsibility for correcting all the imbalances created by the irresponsible policy of the former government, and that it has the capacity to restore the balance in the economy," prime minister Ludovic Orban said in a televised statement at the beginning of a government meeting.
According to Romania's constitution, a bill for which the government takes responsibility before parliament can be passed only if the cabinet is not dismissed through a no-confidence motion filed in the following three days.
If the bill passes, it must then be promulgated by president Klaus Iohannis.
GDP is expected to grow to 1.129 trillion lei ($236 billion/212 billion euro) next year, the budget bill text shows.
An average exchange rate of 4.75 lei per euro and a net monthly average monthly salary of 3.324 lei is projected in the 2020 budget.
Average inflation is forecast at 3.1% in 2020.
The budget projects cash deficit at 3.59% of GDP, while the deficit under the European System of Accounts (ESA) standards is forecast at 3.58% of GDP. The ministry aims to narrow the gap to 1.94% by 2023, in order to return to the deficit target of below 3% envisaged in the Maastricht Treaty, the buget draft reads.
According to the Maastricht Treaty signed in 1992, the ratio of the annual general government deficit relative to GDP at market prices must not exceed 3% at the end of the preceding fiscal year.
Budget revenues are projected at 360.14 billion lei, or 31.89% of GDP, while expenditures are forecast at 400.69 billion lei, or 35.48% of GDP.
Investment spending is seen at 50.7 billion lei in 2020, or 4.5% of GDP.
(1 euro = 4.7781 lei)