Ilie Bolojan: It is very likely that we will not be able to close the next year's budget in December and will have to extend it in January
Ilie Bolojan Photo: Inquam Photos / George Călin
Prime Minister Ilie Bolojan declared, on Monday, at the General Meeting of the Association of Municipalities in Romania, that it is very likely that we will not be able to close the next year's budget in December and we will have to delay it in January, since, before the adoption of the budget, we must adopt all the legislation that will allow us to have a predictable budget.
“It is very likely that we will not be able to close the next year's budget in December and will have to delay it in January, since, before adopting the budget, we must adopt all the legislation that will allow us to have a predictable budget. We are in a situation where we should close this year with an 8.4% deficit and what we have committed to for next year is to lower the deficit as close as possible to 6%. If I were to make a statement, I could I say 6-6.5%”, the prime minister said.
Ilie Bolojan mentioned that “we borrowed as a country, accelerated, in the last 5 years”.
“On the background of this growth, of the loans registered by Romania, we ended up with credits of over 200 billion euros and we borrowed almost every year between 20 and 30 billion euros, in recent years. Against this background of accelerated debt growth, even if today Romania has a debt level that will approach 60%, a debt level that is not high, if we compare ourselves to the average of the European Union, of approximately 80% or with the debt level of other states, I don't know, Italy, over 100% for example, our basic problem is that due to the decrease in the country rating, the interest rates that Romania pays are double those that other countries pay”, explained the head of the Executive.
Bolojan also stated that, by and large, “we have paid interest rates that have been between 7 and 8% in recent years and now we have lowered them very slightly below 7%, which means that, practically, the total interest rates we pay are as if we had a double degree of indebtedness, due to the fact that they are double”.
“This means that next year, but also this year, the interest that Romania pays and will pay is almost 3% of Romania's GDP. So the interest we pay this year is approximately 55 billion lei, i.e. 11 billion euros, and next year it will reach 12 billion euros. Of the 6.5% deficit, practically half is occupied only with interest payments. If we do not reduce them, no matter who will be at government in the coming years, there is no way to get out of this trap, we will end up in a dead end. That is why it is very important to regain our confidence in the markets, which will increase our rating and lower our interest rates. And I tell you with all responsibility, unfortunately, every time we started with a deficit and ended up with a completely different deficit commitments that we did not respect, which makes our credibility low, with the related effects, higher costs and so on. This is a major problem that, if we do not treat it seriously, we cannot get out of this vicious circle,” the prime minister said.
Ilie Bolojan mentioned that, in order to get out of this situation, “next year we have to collect the revenues that have been established, based on the taxes that have already been approved”. (news.ro)
