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Government approved the second budget revision of 2018
The Government approved on Friday the second budget revision of 2018, and compared with the initial provisions there are now 9.5 billion lei in additional revenue and 10.7 billion lei in additional outlays, said Minister of Public Finance Eugen Teodorovici said at the Government House on Friday.
"Budget revisions are made to reconcile economic realities with public finances. We started from an initial budget built on certain macroeconomic assumptions and we honour our commitments. We started with five big commitments that we are fully meeting. We have been implementing the measures of the governing programme, the economic stimulus measures and the social measures, both of which are mission accomplished. The budget falls within the deficit target, below 3pct of the Gross Domestic Product (GDP), the target is respected, we do not increase the share of government debt in the GDP, another target respected, we consolidate the ministry's treasury reserves, and we secure the military acquisition spending, as pledged. We also provide the necessary financing for the smooth preparation of the [Greater Union] Centennial celebrations and for assuming the Presidency of the EU Council, also achieved objectives," Teodorovici said.
He mentioned that at this revision there are 9.5 billion lei in additional gov't receipts against the initial budget and 10.7 billion lei in additional outlays, also against the initial provisions. "Investment expenditures will be 40pct higher than the 2017 achievements (...) Also, Romania will maintain the share of government debt in the GDP at 35pct, the fourth lowest in the European Union. And of course the bumper account, consolidated at 31 billion lei, which provides more than five months of before tax financing," added Teodorovici.
According to the data unveiled by Teodorovici, the balance of the government's revenue in 2018 is increased by 831.4 billion lei, with the main influences expected to be reflected in the following receipt categories: profit tax of over 400 million lei, non-tax revenues of 2.3 billion lei in excess, and other amounts received from the European Union - plus 2.6 billion lei. The excise duty revenue is expected to decrease by 1.2 billion lei and VAT revenue by 1.9 billion lei.
After the second revision, the outlays of the national budget increase by 1.7 billion lei, of which staff expenses by 58.4 million lei, goods and services expenses by 224.2 million lei, interest outlays by approximately 994 million lei, subsidies by 98.3 million lei, social assistance expenses by 661 million lei. A decrease by 1.5 billion lei is expected in non-reimbursable external funds for projects.
The first budget revision took place in August this year. Back then, the Ministry of Finance, the Ministry of the Interior and the Ministry of Healthcare were the main beneficiaries of the redistributed funds, while the Romanian Intelligence Service, the Ministry of Research and the Ministry of Energy took the brunt of public fund cuts.
The European Commission on Wednesday requested an annual structural adjustment of at least 1pct of GDP in Romania to correct a significant observed deviation from the adjustment path toward the medium-term budgetary objective (MTO).
The European Commission has drawn attention to the fact that Romania's public deficit has increased in Romania from 0.5 percent in 2015 to 2.9 percent in 2016 and is forecast to reach 3.3 percent in 2018, 3.4 percent in 2019 and 4.7 percent in 2020: this is the highest deficit in the EU.
Pro Romania first vice president Daniel Constantin criticized the Government's economic policy, in Deva. "In reality, there are cuts in the investment area. From the Ministry of Transport I think that 1.2 billion lei is cut off in this budget rectification. Money is divided to other ministries for pensions and salaries. It is good that we have increasingly higher pensions and salaries, but without development, without attracting investment, I believe that Romania will have economic problems. The European funds, as you have seen, are not coming, foreign investors are fewer, Romania is borrowing with increasing interest, and for all these reasons, we conclude that there is a rapid need for change so that things move to a positive direction," said the Pro Romania leader.
In his opinion, the latest governmental reshuffle was "unsuccessful", Constantin considering that it would be necessary to create a new parliamentary majority and then a change of government.