Without a credible plan to reduce the budget deficit Romania will be penalized

Financial markets will penalize Romania if the authorities do not quickly present a solid and credible plan to reduce the budget deficit, warns economist Cristian Popa, a member of the National Bank's Board of Directors.

Speaking at a debate on the financial sector, he said that a country's fiscal policy must take into account the long-term perspective, not electoral emergencies.

Cristian Popa also outlined the steps that need to be taken to reduce the budget deficit.

"Any sustainable fiscal consolidation must begin with a rigorous review of public spending. Making the allocation of budgetary resources more efficient is a natural first step in a process of sustainable adjustment, and I believe that waste should not be tolerated. The question remains, of course, whether spending reduction measures can bring in the necessary amounts. So the next logical, but also moral, step, in my view, is to improve revenue collection, which is, unfortunately, low in Romania. Only then, if the first two steps are not enough, do I think we can have a realistic, balanced, and informed discussion about tax adjustments. Any order other than the one I have outlined for achieving these three categories could raise moral issues in society, and it seems that it already has. Political negotiations around the deficit are natural and should not be a cause for concern; they are part of the exercise of democracy. However, more important than negotiations is having a clear vision of our economic future", explained Cristian Popa.

Translated by: Radu Matei