I think we can question the association of the two years because they would differ in that they would “accept” the manifestation of the persistence effect, the “lipstick effect”. In the field of microeconomics, this is also called the “income effect”.

Simply put, this effect explains the change in demand for goods and services as a result of an increase or decrease in income and implicit purchasing power. Therefore, this effect can have both negative and positive connotations. The effect of lipstick was first mentioned by Juliet Shore, professor of economics and sociology, in her book “The Overspent American” in 1998.

What we already know is the construction of the budget for 2024. The coordinates are highlighted in bold, and you should not completely exclude the possibility of their implementation. The anchor is a deficit of 86.6 billion lei, which is equivalent to 5% of GDP. Budget revenues will increase by 13% to 586 billion lei, and expenses will increase by 9% to 672.8 billion lei. All this in conditions of economic growth of 3.4%.

Reading these numbers, one might be tempted to define 2024 as a year of discipline, at least economically. It would be very good.

Question: How “disciplined” can the economy be in an election year?

Answer: exemplary “disciplined” if left alone. Another reality of 2024 is that we will have 4 rounds of elections and tax reform. This reality is essentially a link between two years, 2024 and 2025.

Two more points should be added. The first is the middle of the year, when certain details of an economic and political nature are clarified. The second milestone comes after the parliamentary elections and the passage of the new Government through the Parliament, because the new Government will come with a new government program, which may or may not coincide with the existing one. This can slightly or significantly change the original budget structure. In my opinion, there will be changes.

A good exercise to start with is to write a simple, clear and reliable sentence using the following three words: discipline, election, taxation.

What major trends will shape the economic and political landscape in 2024?

Economically, after the stability of 2023, we will initially observe caution, attention, but also a tendency to substitute. These characteristics are explained almost exclusively by consumer expectations of a decline in disposable income.

Quantity will prevail over quality, and in this context, replacement is, more often than not, the “middle ground”. It also calls into question how the shadow economy will respond. Not if, but how much.

In this context, the question arises: how possible is the assumption of a better (increasing) collection of budget revenues? In my view, such a hypothesis is not unrealistic, but it is bold enough to confuse those who listen to it.

On the other hand, we have an election year. In such years, the electoral market comes to life. It is absolutely natural and healthy. In this market, as in any market, there is demand and supply. On the “demand” side, there are voters, and on the “supply” side, those who want to be elected. Please, the order can also be changed as in any market.

As in other markets, and in the election market, before launching a new product, market research is carried out so that the offer is as close as possible to what is “wanted” in the market, or it is not found, or it is already outdated and can to be innovative.

I prefer to debate in these terms, because the idea of ​​”electoral handouts” seems to me inappropriate and inappropriate, but not necessarily wrong. It’s about ‘supply’ and it’s the same as in any other developed market/country. In return, this proposal involves spending, in other words, spending. With this, we can close the budget equation. The deficit is the difference between revenue and expenditure, and achieving the deficit target depends on how both variables are managed. At least I think it should be.

How can the business community’s perception of the economic environment created by the new fiscal and budgetary rules change?

A vis a vis overview of the changes that regulation brings to the economic environment can be created after analyzing these measures. We can have a first impression, which, of course, will not be uniform or necessarily telling.

Accurate evaluation and correct perception occurs only after a period of implementation, even a year, when it is easy to observe whether the originally proposed goals have been achieved and to what extent. Were the measures too bold or inappropriate?

First, changing the rules of the game is undesirable rather than acceptable. Also, let’s not forget that the best and correct communication is necessary to achieve the highest degree (it will never be complete) of acceptance (the level of voluntary compliance is a good example).

Budget execution is measured more accurately if both the budget deficit and the degree of revenue collection are used

It is difficult to agree with a possible increase in budget expenditures, as long as budget revenues (in GDP equivalent) are significantly lower than the usual indicators of the economy and significantly lower than the European average. I will repeat myself: I believe that the effectiveness of the budget is measured more accurately if both the budget deficit (3% of GDP) and the degree of revenue collection (for example, the agreed minimum level, but not less than 33% of GDP) are used. reference indicators.

Of course, the modification of the Maastricht criterion for the budget deficit is a difficult task, but I think it can bring great benefits, if we take into account the dynamics of public debt challenges in the last 10-15 years.

Will 2024 and 2025 be difficult for the evolution of democracy or for the social structure (for society in general)?

I believe that it would be fairer to count on provocation. I see them that way, and the problem would be that it would be difficult to choose the lesser good over the lesser evil. Democracy is not a perfect system, but it can be improved. Society is neither homogeneous nor inclined to become so anywhere.

From the point of view of rights and duties, society can easily be divided into smaller parts than the basic cells of which it is said to consist. Who is behind whom? Principles at the base of ethics or ethics at the base of principles? Can you ask the company to adhere to certain principles? Definitely yes.

Society creates democracy, but only an educated society can implement democracy.

When will most of society (never all) respect most principles (never all)? I think that only when the majority of people in society will respect the same norms of moral behavior, the same code of ethics.

And Kant says that the basis of ethics is the specific activity of the pure mind and that practical rules can be subjective (and they are only maxims) or objective (they are laws). S. R. Covey says that principles are guiding principles, natural laws that cannot be broken. The discussion is ideological and possibly boring, so I’ll stop. Finally, I think the next two years will be difficult, first of all, for the simple fact that society creates democracy, but only an educated society can bring democracy.

What are your hopes for the next two years? And what gloomy scenarios can come true?

If you want to entertain God, share your plans (or scenarios) with him. However, it is possible to discuss hopes with him, because I think he has an extraordinary sense of humor. The bleak scenario would be that future decision-making will be a complex, contentious, and eventually controversial process.

Another gloomy scenario can be a situation when society understands the need for reforms (and not only fiscal ones), but does not support them, either because it does not understand them, or because it does not trust them, or because it is simply fed up, so after 34 years of reforms and sacrifices, they are still walking down the tunnel, looking for the light at the end.

Any dark situations we may find ourselves in can be avoided by simple, honest and constant communication. Even being controversial, Asimov is increasingly right: “The saddest aspect of life today is that science accumulates knowledge faster than society accumulates wisdom.”

And since the future will become real not so long ago, let the next year be better and clearer for everyone. Happy Birthday!

N. ed. Florian Libokor is BRD’s Chief Economist and the opinions expressed in this article are personal and do not involve the institutions he is affiliated with. HotNews asked the question in the intertitles.