March 3 (SeeNews) - Romania's parliament approved the 2021 state budget, which projects a deficit equivalent to 7.16% of gross domestic product (GDP) and 4.3% economic growth.
The 2021 state budget was adopted in the form originally proposed by the government, with 234 votes in favour and 170 against, according to data posted on the Senate website on Tuesday evening.
The budget deficit on a cash basis is projected at 7.16% of GDP, while the deficit under the European System of Accounts (ESA) standards is forecast at 8.23% of GDP. The government aims to narrow the gap to 2.9% by 2024, in order to return to the deficit target of below 3% envisaged in the Maastricht Treaty, the budget bill 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 365 billion lei, up 13% on the year, while expenditures are forecast at 445 billion lei, 5% higher than in 2020.
Investment spending is planned at 61.4 billion lei in 2021, or 5.5% of GDP.
The budget bill envisages that public wages and compensations will be frozen at the end-2020 level, student transport subsidies will be cut and state employees will no longer be remunerated for overtime work but will get extra vacation days instead.
At the end of 2020, Romania had around 1.249 million public sector employees, representing 22% of all employees in the country, data released by the labour ministry last week showed.
Prime minister Florin Citu has repeatedly said that the 2021 budget should envisage reforms in all sectors.
"The budget for 2021 is a little late because I asked for a very important thing, namely that public subsidies and expenditures depend on reform. It is very clear: no money goes to any sector if I do not see these reforms coming," Citu said in a televised statement on February 1.
According to the budget bill, GDP is expected to grow to 1.116 trillion lei ($278 billion/229 billion euro) this year. Unemployment is seen at 3.5% and the average net monthly salary at 3,323 lei.
Average 2021 inflation is forecast at 2.4%.
Romania's consumer prices rose by 2.99% year-on-year in January, compared to 2.06% in December, according to the latest data available from the national statistical office.
For 2020, the government estimates Romania's economic output to have shrunk by 4.4%, while the budget deficit is seen at 9.1% of GDP, according to the latest data available from the finance ministry.
The bill must nw be signed into law by president Klaus Iohannis.
(1 euro = 4.8747 lei)