Public finance deficit set to go up to 4.7% in 2023

The government expects budget deficit of 4.7% of GDP in 2023, up from 3.7% last year, due to tariff regulations and compensation payments, among others, according to the Multi-annual Financial Plan for 2023-2026, which is based on predictions of spending, a standard method used by international institutions such as the European Commission.

The Plan also predicts a slowdown in economic growth in 2023, with real GDP expected to rise by 0.9%, and investment growth at 1.1%, primarily due to a slight decline in private investments. However, this will be compensated by an increase in public investments, including military and reconstruction projects, resulting in faster investment growth in the following years.

The unemployment rate is expected to rise slightly to 3.2% in 2023, but remain low in the subsequent years, while inflation is expected to drop to single digits by the end of 2023.

The Plan is based on more conservative assumptions, without taking into account the savings from the crisis years, and aims to reflect the realistic implementation of spending limits. The document includes the Convergence Program Update 2023, which will be submitted to the EU by the end of April, and which is expected to be the last convergence program. 

Source: TVN