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The Fiscal Council : the drawing up of the budget for 2022 will be a very severe test
The Fiscal Council appreciates that the situation of the budget deficit for the present year at the targeted level of 7.13%of GDP seems feasible, as the unexpected growth of the necessary for current expenses is covered by supplementary income.
But the drawing up of the budget for 2022 will be a very severe test taking into consideration the necessity to manage the difficult situations that Romania is facing (sanitary crisis, the shock of the energy prices, effects of the tensions on the international markets)considers the Fiscal Council.
The budget adjustments operated during 2021 meant the biggest upwards revision of the revenue in the history of the budget constructions evaluated by the Fiscal Council.
The Fiscal Council mentions the fact that a rigorous control of the public money expenditure is mandatory, as it represents expenses to ensure public goods for the citizens (health, education, etc.) and which should take into consideration the restrictions imposed by the budget consolidation, to be combined with the increase of fiscal income.
‘Without a substantial increase of the fiscal –budget income it will be practically impossible to face the present and future challenges which refer to the public budget and the Romanian society. The deficit of VAT collection, which a recent report of the European Commission places, in relative terms, at the highest level in the EU – 34.9% in 2019 makes the ANAF reform compulsory as well as a firm campaign of collection growth. As the slippage of budget expenses of this year demonstrates, the process of budget consolidation over the next years only through restrictions at the level of expenses has little probability to be made’ the Fiscal Council says.
‘The budget construction for 2022 will represent a very severe test taking into consideration the necessity to manage the difficult situations which Romania is facing (sanitary crisis, the shock of energy prices, effects of the tensions on the international markets) which need adequate resources, with the need to consolidate the budget. The fiscal-budget consolidation is necessary in itself (to support public financing) and to finance external imbalances. The latter ones, if they are big and difficult to finance endanger the financial and economic stability’ the Fiscal Council says.
‘Total budget revenue increases at the second budget adjustment by 5.2 billion lei. Upwards revision of the initial estimates are operated at the almost entirely of the income dependent on the nominal GDP dynamics, changes being recorded in case of the sums coming from European funds and those with the only source of renting 5G frequency bands.
Upwards revision of the budget revenue is explained mainly by two factors: the increase unexpected previously of the estimate for GDP and the behaviour of the companies which paid the taxes postponed for payment the previous year over the level estimated on the occasion of the first adjustment operated in August 2021.
The Fiscal Council appreciates the new level of estimated collections as being comparable to the latest macroeconomic prognosis of CNSP and the budget execution.
As for budget expenses there is a new increase (+6.3 billion lei) as compared to the parametres approved at the first adjustment, mainly as a result of the supplementary current expenses – especially the ones connected to personnel, goods and services social assistance – partially compensated by the diminution of the investment expenses.
The Fiscal Council appreciates as probable the new level projected for the budget expenses, but this appreciation does not mean a positive judgment of the level of expenses for some of the chapters in the budget structure.