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Walking a thin line 2017 Romanian Budget

Date: 02/21/2017
Source: KPMG Romania
Each year the Government announces the draft state budget. Apart from being one of the most important tasks of the executive, it is also an opportunity for numerous and sometimes fierce debates between political decision makers. In parallel, this exercise is widely covered by the media and the reverberations are propagated extensively at social and business levels.

Traditionally, governmental budgets embody several functions, beside the relatively obvious one of monitoring the Government’s overall revenues and expenditures. One of the most important functions is to ensure economic stability and avoid fluctuations, as much as possible. This is achieved by stabilizing prices in the economy, using policies of budget deficit/surplus as the main tool. Another similarly important function is to ensure economic growth. Here the government juggles with two budgetary elements; savings and investments, and so it must ensure through the relevant budgetary policies that there are sufficient resources for investments to be made in the economy.

Last but not least, the budget is designed to achieve an effective allocation of resources by taking into account economic and social considerations (this also fulfils a secondary role of reducing possible disparities or inequalities).
As always, there will be winners and there will be less favored areas in terms of the budgetary impact. The real challenge however, and also an aspect to monitor in the up-coming months, is that the outcomes are not achieved at the expense of two core components of any sound economy, i.e. the business environment and the society in general.

View the annex for more details in English and Romanian.

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