Deficit spending

Bank of Greece Governor Yannis Stournaras expects the country's economy to contract by 6% of gross domestic product this year as a result of the coronavirus crisis, but this could be followed by a rebound of 5.5% in 2021, he told a committee in Parliament on Monday.

Greece has returned to budget deficits, instead of surpluses, due to the coronavirus pandemic, Bank of Greece data for the January-April period have shown, while the government is preparing to announce a new package of financial measures for the June-September period, probably on Wednesday.

It's the first time in history when fiscal and monetary policy work nearly perfectly, stated, on Monday evening, at private broadcaster B1TV, the Minister of Public Finance, Florin Citu, mentioning that the message given by the National Bank of Romania (BNR) is very important. "Besides the relaxed fiscal policy we now have another impulse.

The budget deficit increased in March by almost 10 billion lei, reaching 1.67 pct of the Gross Domestic Product after the first three months of the year, from 0.73 pct at the end of February, according to data published on Monday by the Ministry of Public Finance.

The deficit of the consolidated general budget for this year rises to 6.7pct of GDP at the first budget adjustment this year, given that the measures adopted to stimulate the economy represent 3pct of GDP, announced on Wednesday Finance Minister Florin Citu in a statement at the Victoria Palace. According to him, the cash deficit increases by 31.9 billion lei.

The problem. Mitigating the impact of the Covid-19 pandemic will require a significant increase in public spending to rescue sinking economies and further shield health systems. At the same time, tax revenues will be collapsing as long as economic activity remains suppressed. Budget deficits will inevitably swell, leading to soaring public debt.

European Union finance ministers formally endorsed on Monday the suspension of EU limits on governments borrowing to give the 27 EU countries a free hand in fighting the disastrous effects of the coronavirus epidemic on the economy.

In order to have lower interests, Romania must sort out the deficit issue, Finance Minister Florin Citu said on Thursday; he also stated that this year the budget deficit stays at 3.6 percent of GDP and will fall below the 3 percent threshold in 2022. "Mr. central bank governor Mugur Isarescu is largely right: in Romania, the issue is not directly the interests, but the deficits.

Romania will fall under the excessive deficit procedure, something that cannot be avoided and the earliest it can happen is in March, Minister-designate of Public Finance Florin Citu told Monday evening private TV broadcaster Realitatea Plus. "The talks are ongoing with the European Commission. (...) And, yes, Romania will enter the excessive deficit procedure.

International borrowing is proof of responsibility, but the country's deficits are worrisome, the governor of the National Bank of Romania (BNR), Mugur Isarescu told a press conference, when asked about the latest loans contracted by the Ministry of Public Finance. "Worrisome, an element of concern or as you might want to call it, not of panic, however, are the country's deficits.