Investments, the trigger that can restart the economy
Bucharest, 2nd of March, 2021
Through the measures adopted since the beginning of the health crisis, Romania has proved that the main concern is overcoming the issues of the healthcare system, ensuring the security of its citizens, together with supporting the economy. The Foreign Investors Council (FIC) welcomes the adoption of the budget by the Parliament and considers that it reflects a balanced and favorable vision for Romania's economic recovery.
We consider that the central elements of the construction of the current budget are well outlined by the realistic estimation of future revenues and the framing of the general consolidated budget deficit (of 7.16%) within the acceptable limits at EU level. All this can ensure the successful implementation of the measures in the governing coalition program, such as the stability of the level of taxation, ensuring the reduction of administrative expenses in the coming years, further fiscal consolidation and the orientation towards large investment projects. Another important element is the allocation of 5.5% of GDP for investment, which shows a way of rethinking the priorities in the future. The investments scheduled for this year reach an all-time high, amounting to 61.4 billion RON and can play the catalyst role in relaunching economic growth. In addition, the budget provides for a substantial allocation for the state contribution to European-funded investment projects (co-financing 2.9% of GDP), being a good indicator for a greater absorption of funds and sending a positive signal to the business environment, which is still coping with the impact of the health crisis.
The FIC considers that the current budgetary challenges can be solved through a series of measures whose implementation does not require an additional financial effort, as long as political will is ensured.
We refer mainly to the potential for revenue growth by improving the tax collection system and the digitalization of ANAF, but especially by creating and implementing a vision for Romania to attract high value-added investments, which can play an important role in stimulating sustainable economic development. The implementation of structural reforms will help maintain the budgetary balance, particularly if adjustments are made in relation to the administrative expenditures and in conjunction with the launch of public and private investment projects.
We believe that foreign direct investment can make a significant contribution to the economic recovery and therefore we reiterate the need to outline legislative measures and institutional structures dedicated to attracting foreign investment, considering this a priority for the next period. From this point of view, the FIC remains an active partner of dialogue that can support the authorities in such endeavors.