Why the Forecasts Commission and Institute did not know Romania would see a decline in 2010

The president of the National Forecasts Commission, Ion Ghizdeanu, and the director of the Forecast Institute, Lucian Liviu Albu, say they are not responsible for the budget being built on a 1.3% economic-growth forecast in 2010, which is now proving to be a 1.7% decline.

The reality however shows that the Government built the 2010 budget based on a 1.3% economic rise and expected a certain level of revenues and expenditures.

But since the economy declined, revenues did not match the forecast, so the government had to restructure costs significantly.

The National Forecasts Commission provided for a 1.3% economic growth in 2010, while Lucian Liviu Albu, director of the Forecasts Institute of the Romanian Academy at the end of last year expected an economic growth of between 1 and 2% of GDP.

How does Ion Ghizdeanu, president of the Forecasts Commission explain the fact that in December last year the Commission expected an over 1% economic growth based on which the 2010 budget was built, while in August this year the Government admitted there would be a 1.7% – 1.9% economic decline?

“Three factors are involved,” explains Ghizdeanu. “Firstly the international context, because the European Commission’s autumn forecast expected a fast recovery. The state of the agriculture was another factor, and thirdly there were the much tougher restructuring measures that were not known back when the budget was put together.”

Wasn’t the way the budget was built wrong?

“No, it wasn’t. I don’t know what you mean. There is no point discussing this,” says Ghizdeanu.

“Just like Europe was expecting an over 1% rise in 2010, and many countries are not achieving it, the same thing is happening to us. This is about uncertainty factors, not about mistakes,” says the president of the Forecasts Commission.