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Gov't approved third budget revision this year
The government approved Monday evening this year's third budget revision, which increases the budget deficit to 9.1 percent of GDP from the previously estimated 8.6 percent.
The fresh revision also envisages an economic contraction of 4.2 percent.
"The third budget revision for 2020 was approved at today's government meeting. Through this revision, this year's budget deficit was increased to 9.1 pct of GDP, specifically 96 billion lei, based on an economic contraction of 4.2 pct and a nominal GDP of 1,050 billion lei. The consolidated general budget deficit increases by 5 billion lei, of which 4.2 billion lei arise from the decrease of the general consolidated budget revenues and 0.8 billion lei from higher expenditures of the general consolidated budget," Finance Minister Florin Citu told a press briefing at the Victoria Palace after the meeting of the Executive.
The revenues of the general consolidated budget are estimated at 337.8 billion lei, respectively 32.2 pct of GDP, of which 298.3 billion lei (28.4 pct of GDP) are revenues from the economy and 39.5 billion lei (3.8 pct of GDP) are non-reimbursable external funds.
The expenditures are estimated at 433.8 billion lei, or 41.3 pct of GDP.
"This revision is necessary because we had a situation that generated new and new challenges, new and new expenses. We had to deal with newly emerged regulations that generated new expenses and, practically, it is absolutely necessary to adopt this emergency ordinance on state budget revision in order to achieve these objectives. Firstly - providing resources for the payment of pensions, it is known that we have increased the pension point by 14% and it is necessary to ensure the financial resources for the payment of pensions," PM Ludovic Orban said at the beginning of the Government meeting.
"There is also a need to increase health spending, especially in the National Health Insurance House budget, to cope with the increased health spending caused by the COVID pandemic," Orban said.
He also referred to the additional amounts allocated for investments at the Ministry of Public Works, Development and Administration to "be able to meet payments under local investment programs."
"The budget also needed revision in order to provide additional financial resources for the payments that occurred during this year, whether it was payments to compensate farmers whose areas were affected by the drought, or payments that had to be carried out to settle the diesel subsidy," explained the head of Government.
The prime minister pointed out that the revision is also necessary for making payments within the various aid schemes for companies that have been affected by the COVID pandemic.
Prime Minister Ludovic Orban urged the chief authorizing officers to be "extremely careful" in making expenditures, in order to maintain a budgetary balance that would allow Romania in the coming years to return to a budget deficit below 3% of GDP as soon as possible.