The RON 6 billion funds that the Government will use for the first fiscal rectification this year are on increases in salary, pension and health care spending, while the most important cut, of RON 1.68 billion, is for investments.
The government estimates budget revenues of RON 294 billion, according to the budget rectification project, with RON 6 billion more than the initial version of RON 288 billion. It is interesting to know that recently The National Commission for Strategy and Prognosis (CNSP) has revised downward its estimates regarding the gross domestic product (GDP) growth rate, but rose the forecast for GDP value, helping the government to expand its fiscal deficit.
In its latest report, the commission estimates Romania’s GDP will grow by 5.5 percent in 2018 (compared with 6.1 percent in the previous forecast, released in April), up to RON 945 billion (EUR 203.2 billion).
At the same time, the rectification plan foresees large expenditures of RON 7.1 billion and a budget deficit of RON 28 billion, representing 2.97 percent of GDP. The RON 7.1 billion amount comes from an increase of the estimated revenues by RON 6 billion, while the RON 1 billion comes from the increase of the budget deficit to RON 28 billion.
The positive impact on the budget would come mainly from social security contributions, an additional RON 6.3 billion, from non-tax revenues, by RON 2.55 billion more than the Government anticipated through the budget at the beginning of the year, and from income tax, by RON 1.7 billion.
The minus would be the VAT receipts this year, with a collection deficit of RON 2.1 billion, the tax on the use of goods, with a minus of RON 1 billion, and the capital incomes also by RON 1 billion lower than the government anticipated earlier this year.
The largest allocations
The largest allocations in the budget rectification of RON 6 billion will be for personnel expenses, where they will be allocated RON 86.2 billion, around RON 5.1 billion more than in the initial version.
Supplements to the State Budget and social insurance were made in:
The budget of the National Health Insurance Fund of RON 557.5 million lei,
- MFP – General Actions – RON 1,278 billion,
- MFP – RON 580.7 million,
- Ministry of Internal Affairs – RON 366.3 million,
- the Ministry of Health – RON 333.6 million,
- the Ministry of Communications – RON 206.9 million,
- the Ministry of Education – RON 178.1 million,
- the Ministry of Transport – RON 170.5 million,
- the Ministry of European Funds – RON 119.2 million,
- the General Secretariat of the Government – RON 147.8 million,
- ANSVSA – RON 99.5 million,
- the Ministry of Agriculture – RON 73.4 million.
The rectification of the consolidated general budget is mainly concerned with ensuring the necessary for:
- salary rights – the total influence at the level of the general consolidated budget around RON 5.1 billion, and from the state budget and the social insurance budgets the amount of RON 3.8 billion, out of which RON 3.6 billion for the health system,
- social assistance expenses – RON 1.8 billion, to a total value of RON 100.4 billion,
- expenditures for the payment of Romania’s contribution to the EU – RON 0.8 billion
- supply of the Budgetary Reserve Fund – RON 0.2 billion,
- amounts deducted from VAT for balancing local budgets and the School Scheme – RON 1.13 billion.
Who’s losing money
The most important expenditure cut is scheduled for investments, where the rectification provides for total allocations of RON 37.7 billion this year, down RON 1.7 billion.
Subsidies will be lower this year than planned by RON 491 million to RON 6.72 billion.
Ministries and institution with budget cuts:
- Ministry of Research – RON 122 million,
- SRI – RON 113 million,
- Ministry of Energy – RON 45.7 million,
- Ministry of Development – RON 44.2 million,
- Ministry of Foreign Affairs – RON 35.1 million,
- SPP – RON 22.6 million,
- Ministry of Tourism – RON 17.3 million,
- Ministry of Environment – RON 17 million,
- SIE – RON 16.5 million,
- STS – RON 16,2 million,
- The Ministry of Economy – RON 15 million,
- The Presidential Administration – RON 11 million.