BUCHAREST: European Union recovery funds will help Romania boost its investment spending to 6.7% of gross domestic product (GDP) in 2022 from an estimated 5.6% this year, the finance ministry said.
The ministry's 2022-2024 budget strategy, released late on Saturday, estimates investment could reach 7.7% of GDP by 2024 and help the EU state's economy grow 5% per year on average.
Romania's infrastructure is among the EU's least developed, with massive investment needs in transport, healthcare and education, but some analysts have said the country's poor institutional capacity could mean it will struggle to make full use of the bloc's recovery funds.
Romania's 2022 budget plan, which has yet to be approved, will be based on an economic growth assumption of 4.6% and target a cash deficit of 5.8% of GDP, as agreed with Brussels, the ministry said.
The country, which expects to run a deficit of 7.1% this year, has committed to gradually lower its fiscal shortfall below the EU's 3% threshold by 2024 and keep its public debt levels around 50% of GDP.
In 2022 the finance ministry expects budget revenues worth 33.4% of GDP, or 439.9 billion lei ($99.95 billion). Electronic billing, custom reform and digital services will help Romania add 0.8% of gross domestic product to its consolidated budget revenues next year and up to 1.5% by 2024, the ministry said.
The country collects a significantly lower proportion of revenue than the EU average of roughly 46% of GDP.
The ministry said a diminishing labour force will be one of the main challenges to the country's development in the medium term. It estimated its working age population will fall by 387,000 people, or roughly 3% from 2022 to 2025.
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