Case Study on Budgetary Developments in Romania Before the Economic Crisis
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Authors:
• Carmen UZLAU, email: carmen_uzlau@yahoo.com, Afiliation: Hyperion University, Bucharest, Romania
• Corina Maria ENE, email: corina.maria.ene@gmail.com, Afiliation: Hyperion University, Bucharest, RomaniaPages:
• 286|301 -
Keywords: budget, economic crisis, development, economic policy, fiscal policy.
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Abstract:
Abstract:\r\n\r\n Fiscal policy, along with monetary policy, are the tools that the state can use\r\n\r\n to achieve macroeconomic stabilization. Under the terms of accession to the\r\n\r\n eurozone, fiscal policy remains the only instrument by which the state can\r\n\r\n intervene in the economy, while monetary policy is becoming common with that of\r\n\r\n other Member States. It is therefore necessary to introduce measures aimed at the\r\n\r\n stability of public finances.\r\n\r\n There has been an increase in the volume of arrears of state firms, but also\r\n\r\n of private ones, an unsustainable increase of public expenditures in the period\r\n\r\n 2006-2008, the authorities took this decision relying on the increase of public\r\n\r\n revenue in the future. No steps have been taken to improve the system of tax\r\n\r\n collection and payment of taxes, and fiscal relaxation measures only temporarily\r\n\r\n increased the tax base.\r\n\r\n Romania is ranked last place in terms of the degree of taxation.\r\n\r\n Once the crisis began, at the European level there has emerged a weak\r\n\r\n capacity to finance the current budget deficits and public debt, which has\r\n\r\n increased the degree of risk of economies with unsustainable public finances\r\n\r\n (including Romania), leading to higher interest rates related to refinance debt.\r\n\r\n The Romanian State was forced to resort to the IMF and European\r\n\r\n Comision to reduce financial instability installed. Romania had to implement a\r\n\r\n series of measures aimed at fiscal consolidation, reducing the budget deficit, thus\r\n\r\n regaining trust of international creditors.\r\n