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Fiscal Council: Negative income rectification likely to set pressure on future budgets


The budget rectification confirms an income drop, if we exclude the impact of swaps. New projections do not clearly show how income holes in the first semester can be covered or the future minuses from CAS. This will create impact on future budgets, the Fiscal Council says.


“At budget income level, the rectification proposal has in view their increase by 1.54 billion lei, but after adjusting the impact of arrears reduction toward BGC (with impact on VAT and social contributions) and the amendment of accounting treatment of sales-purchase operations from state reserves (with impact on capital incomes) which artificially increase incomes by 1.66 billion lei, incomes appear slightly negative, by 128 million lei,” is the opinion of the Fiscal Council.

Both budget incomes and expenses were significantly under the initial semester program of the General Consolidated Budget (BGC).


The overall BGC incomes were lower by 4.5 billion lei than the programmed amount, reaching 100.38 billion lei, while expenses were 9.4 billion lei lower, at about 103.86 billion lei, “so that at the level of budget deficit there is a favorable impact (a lower deficit than the semester target) of 4.9 billion lei.”

The biggest contribution - over a half- was the poor performance in the absorption of European grants, the return applications for projects financed with EU funds being 2.71 billion lei, 2.8 billion lei lower than the programmed amounts. The failure of those projects attracted savings compared to the programmed level of 4.4 billion lei.


At the same time, the budget registered significant failures compared to the level programmed for fiscal incomes, incomes from social contributions and non-fiscal incomes.


Fiscal incomes of 60.88 billion lei were under the initial semester level of 954 million lei and has as source the level of 96.4% of the income program from taxes (which determined an income minus of 426 million lei), the 94.3% of the semester incomes from VAT, materialized in a minus of 1.49 billion lei. At the same time the 97.4% of the income level from excises led to a drop of 301 million lei.

“We consider that the unfavorable evolution of incomes from taxes shows a significant drop of collecting efficiency”, the Fiscal Council shows.


The first budget rectification, established with IMF and EC, will be approved by the government in a special meeting scheduled for Friday, while the second one will be made at the end of September, after new consultations with international financial partners and based on new laws coming into force.