Romania to increase investment spending to 6.7% of GDP in 2022 – FinMin Strategy

BUCHAREST, December 19 (Reuters) – European Union stimulus funds will help Romania increase investment spending to 6.7% of gross domestic product (GDP) in 2022, from around 5.6% this year , announced the Ministry of Finance.

The ministry’s 2022-2024 budget strategy, released on Saturday evening, estimates that investment could reach 7.7% of GDP by 2024 and help the European state’s economy grow by 5% per year on average.

Romania’s infrastructure is among the least developed in the EU, with massive investment needs in transport, healthcare and education, but some analysts have said the country’s weak institutional capacity could mean that it will struggle to fully utilize the bloc’s stimulus funds.

Romania’s budget plan for 2022, which has not yet been approved, will be based on an economic growth assumption of 4.6% and will target a cash deficit of 5.8% of GDP, as agreed with Brussels, the ministry said.

The country, which expects a 7.1% deficit this year, has pledged to gradually reduce its budget deficit below the EU’s 3% threshold by 2024 and maintain its debt level public around 50% of GDP.

In 2022, the Ministry of Finance expects budgetary revenue to the value of 33.4% of GDP, or 439.9 billion lei ($ 99.95 billion). Electronic invoicing, customs reform and digital services will help Romania add 0.8% of gross domestic product to its consolidated budget revenue next year and up to 1.5% by 2024, said the ministry.

The country receives a much lower share of revenue than the EU average, around 46% of GDP.

The ministry said the shrinking workforce will be one of the main challenges for the country’s development in the medium term. He estimated that its working-age population would decline by 387,000 people, or about 3% from 2022 to 2025.

($ 1 = 4.4012 lei)

Reporting by Luiza Ilie; Editing by William Mallard

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