Tax Council head: Collections below expectations, rising social expenditures, massive public investment adjustment

The budget picture is quite complicated, as collections are below expectations, social expenditures are going upwards and public investment undergoes massive adjustment, president of the Tax Council Ionut Dumitru told a conference organized by the Romanian Association of Financial-Banking Analysts (AAFBR) on Wednesday. 

"The current budget picture is quite complicated, with collections below expectations, a rise in social expenditures past anticipation and a massive adjustment of public investment. Budget revenues have been in a steady decline for two years now. We lost about 2 percent of GDP in tax revenues after the VAT cut, VAT revenues dropped to 6.3 pct of GDP today from an initial 8 pct, 1.7 pct of GDP went lost in budget revenues, whilst tax revenues account for the smallest share in EU, below Ireland's," Dumitru said. 

According to him, the slippage is strikingly obvious in the budget deficit and claiming that others too are running wide deficits is completely off the mark. 

"If we look at the European Commission's projection for 2018/2019, even at 3 percent this year we would have the widest deficit in Europe alongside Spain. In 2018/2019, according to the EC projection, we will by far have the biggest deficit in Europe. No other country will be overshooting 3 percent. According to the updated EC projection, we will have 3.9 percent and 4.1 percent, respectively. It is a drift off the course that probably won't go ignored by financial markets. 3 percent should be the maximum deficit we should have over the entire economic cycle, that is in the worst moments of the economic cycle, but we are running it at the best moments of the cycle. Imagine what this would mean this year, with an economic growth of more than 7 percent and a deficit of 3 percent. This is far too much, a far too wide deficit," cautioned the Tax Council president.AGERPRES .