December 20 (SeeNews) - Romania's government on Monday approved next year's budget projecting an economic growth of 4.6% and a cash deficit at around 5.84% of the gross domestic product (GDP).
"We will approve a balanced, responsible and realistic budget, capable of meeting the imperative needs for financing which will strengthen the economy in the medium and long term, capitalising on the financial resources provided by the European Union," prime minister Nicolae Ciuca said in a televised statement ahead of the government meeting in which the budget was approved.
The budget is expected to be debated and voted on in parliament later this week. It should then be endorsed by president Klaus Iohannis.
The government published the draft budget on Saturday on the finance minister's website.
According to the approved document, in 2022, public wages and compensations will be frozen at the end-2021 level for all state employees except for those working in social assistance, healthcare and education.
GDP is estimated to grow to 1.317 trillion lei ($301 billion/266 billion euro) next year.
An average exchange rate of 4.98 lei per euro and a net monthly average monthly salary of 3.775 lei is projected in the 2022 budget.
Average 2022 inflation is forecast at 6.5%.
Romania's consumer prices rose 7.80% year-on-year in November, compared to 7.94% in October, according to the latest data available from the national statistical office.
The budget deficit on a cash basis is estimated at 5.84% of GDP. The deficit under the European System of Accounts (ESA) standards is 6.24% of GDP.
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. However, the European Commission said in November that no additional measures need to be taken within the excessive deficit procedure (EDP) for Romania for the time being but it will reassess the situation once the new government presents the 2022 budget and a medium-term fiscal strategy.
This year, Romania started a fiscal-budgetary consolidation process, which aims at gradually reducing the deficit to 2.02% of GDP in 2025, according to the draft.
Budget revenues are projected at 439.9 billion lei, or 33.4% of GDP, while expenditures are forecast at 516.9 billion lei, or 39.2% of GDP.
Investment spending is seen at 88.4 billion lei in 2022, or 6.7% of GDP.
Finance ministry analysts said in November that the country's economic output will increase by an estimated 7% in 2021.
Romania's economy contracted by 3.9% in 2020, compared to a growth rate of 4.1% in the previous year and with a consolidated budget deficit equivalent to 9.79% of estimated GDP, compared to a 4.6% gap in 2019.
(1 euro = 4.9492 lei)