The conference “Investments vs. Deficit: Challenges and risks in the economy under the impact of debt and growing public deficits” will bring together the leadership of the Ministry of Finance, leaders from local public administration, financial markets, business and academia, in a debate organized from 9.00, at JW Marriott Hotel, Salon D.
The event will be broadcast live on the Profit.News TV channel, as well as on the Facebook page of Profit.ro.
The conference will be opened by the Minister of Finance, Marcel Boloş, the Minister of Finance, Adrian-Ioan Vestea – the Minister of Development, Public Works and Administration, Ilie Bolojan – the President of the Bihor County Council, Sergiu Manea – the President of the Romanian Bank Patronage Council (CPBR), Ştefan Nanu – Director General of the State Treasury, Ramona Jurubiţă – Vice-President of the Council of Foreign Investors (FIC), Daniel Dăianu – President of the Fiscal Council and Alin Marius Andries – Secretary of State, Ministry of Public Finance, have already confirmed their participation in the debate.
The conference is organized in a context in which the budget deficit skyrocketed at the beginning of this year, reaching 1.67% of GDP after only two months, with prospects of worsening in March. The hole of 29 billion lei accumulated in the first two months, of which 21 billion in February alone, marks an unfortunate record for this period.
Simultaneously with the deterioration of the budget deficit, the public debt also deepens, marking, at the end of 2023, an increase of more than two times compared to 2019. The more than 782 billion lei equaled 48.9% of GDP, and the prospect of exceeding the threshold of 50 % of GDP, above which the Government must automatically adopt spending reduction measures, is imminent. The exemptions given frequently in the past to the Fiscal-Budgetary Responsibility Law are to be expected this year as well, one with several rounds of elections, but the problem of deficit and indebtedness cannot be rolled over indefinitely. The State Treasury accelerated the loans at the beginning of the year, managing to cover a large part of the financing requirement.
The deterioration of public finances, however, is already putting pressure on the country’s borrowing costs, risking a downward revision of the country’s rating (remarkably avoided so far), especially if budget execution or economic growth disappoints in the first part of the year. Economists expect a second consecutive year in which GDP growth will be below potential, becoming pessimistic about inflation as well.
The local macroeconomic picture overlaps with a period of uncertainty that also dominates the European economy, in the context of the recent crises, the war in Ukraine and the risks that persist for regional financial stability, even if the markets have recovered.
Public finance problems are also a threat to the business environment. Beyond the impact of inflation felt strongly recently, Romanian managers and entrepreneurs fear that the bill for the large deficits of the state will be sent to them as well, in the form of increased fees and taxes after the elections, other casualties risking to be investments.
In such a context, Profit.ro brings into debate topics that concern the business environment during this period. How can the situation of current growing deficits be overcome? In 2024, we should have the highest share of investments in GDP so far. What will happen to public and private investments in the coming months? Priority domains and areas for investments. How can we return to sustained economic growth, after two years of below-potential growth? What are the prospects for the absorption of European funds? What measures realistically have a chance to ensure a dramatic reduction of the deficit by 4 percent of GDP, i.e. no less than 14 billion euros in the next period?
How can the collection of budget revenues be improved, reaching the real areas of evasion, without putting additional pressure on that part of the economy that usually pays its taxes?
The conference will also debate the situation of local public finances, with the challenges of mayors and investment priorities at the local level. What are the expectations of the business environment from local administrators. What happens to local taxes and fees?
Should the discussion about the state of public finances be closely related to the effects passed on in the business environment? How does the entrepreneurial environment adapt in the current context? What budgets do entrepreneurs and managers program in a period of fiscal and macroeconomic uncertainty and what priorities exist for private investments in the midst of technological transformations?
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Tags: Minister Finance opens Profit .ro debate Investments Deficit leaders administration business environment
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