THE IMPORTANCE OF FOREIGN FINANCING AND THE ABSORPTION OF EUROPEAN FUNDS TO COVER THE BUDGET DEFICIT IN ROMANIA

Medar Lucian-Ion
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Medar Lucian-Ion: CONSTANTIN BRANCUSI UNIVERSITY OF TARGU JIU

Annals - Economy Series, 2021, vol. 1, 39-46

Abstract: The budget deficit that is reflected as a percentage of the Gross Domestic Product (GDP) that is calculated as the difference between a state's expenditures and revenues is covered by various financial sources. But in this health crisis, the contraction of the budget deficit depends largely on the return of the national economy to normal. In order to recover the economy affected by the pandemic, it is necessary to encourage foreign investment and especially the absorption of European funds. Controlling the budget deficit depends on public sources of funding, which during the pandemic were directed to the payment of salaries, pensions and facilities provided to vital sectors of the national economy. In the first phase of the analysis of the use of money from European funds, in the severely economic sectors affected by the health crisis, cannot change the fate of a budget deficit because these sources appear on bothsides of a budget, both in terms of revenues and expenditures. But now, at the end of 2020 and the beginning of 2021, in the midst of pandemic, we must insist on this issue because the statement is only partially justified. The issue of the use of European funds must not only be nuanced, but especially in the current circumstances, of the "European Recovery and Resilience Plan" emergence, analysis of the situation of public budgets it changes radically. According to statistical data, Romania's budgetary situation was and is very tense, which is also reflected by Romania's singular placement in the excessive deficit procedure (EDP) of the European Commission (EC) at the beginning of the year. Macroeconomic imbalances - the current account deficit (4.6% of GDP) and the relatively large structural budget deficit (over 4% of GDP) and the persistence of high budgetary pressures to increase permanent spending call for immediate macroeconomic correction to maintain access to market financing and to maintain the country rating.

Keywords: pandemic; public budget; European fund; budget deficit (search for similar items in EconPapers)
Date: 2021
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