February 14 (SeeNews) - Romania's president Klaus Iohannis said on Tuesday that he might send the budget bill back to parliament for re-examination before signing it into law.
"The budget is problematic and risky. It projects revenues which, in my opinion, are overrated," president Iohannis said in a televised statement following a meeting he requested with prime minister Sorin Grindeanu and finance minister Viorel Stefan. "On the other hand, it envisages very high expenses. There is a real risk exceeding the 3% deficit."
"Also, we cannot help noticing that we are dealing with exceptionally high debt commitments, of 54 billion lei ($1.27 billion/1.17 billion euro), which will weigh on budgets in the coming years," he added.
The budget, voted by the parliament on February 7, is built on projections of 5.2% economic growth and projects a deficit equivalent to 2.99% of gross domestic product (GDP). According to the country's constitution, it needs to be signed into law by the president.
Consolidated revenues for 2017 are projected at 254.7 billion lei, or 31.2% of GDP, and expenditures are expected to reach 278.8 billion lei, or 34.2% of GDP. The resulting deficit of 24.1 billion lei is equivalent to 2.96% of GDP in cash terms and 2.99% of GDP under the the European System of Accounts (ESA) standards. 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.
Romania's consolidated budget showed a deficit equivalent to 2.41% of the projected GDP last year, compared to 10.3 billion lei shortfall, or 1.47% of GDP in 2015, according to finance ministry data.
Romania's economy expanded by 4.8% year-on-year in 2016 compared to a revised 3.9% growth in the previous year, flash data from the country's statistical board, INS, showed on Tuesday.
On Monday, the European Commission raised its forecast for Romania’s economic expansion in 2017 to a real 4.4% from 3.9% projected in November, as growth of private consumption and investments is expected to gain speed.
At the beginning of January, the World Bank forecast that Romania's economy will expand in 2017 and 2018 at 3.7% and 3.4%, respectively, and also warned on the possible negative effects of fiscal loosening.
(1 euro =4.5048 lei)