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Tax Council: Budget revision fails to observe two fiscal-budget liability law rules

The 2012 draft budget revision fails two observe two rules set in Law no. 69/2010 on the fiscal-budget liability, the Tax Council said in a release on Wednesday.

The draft budget revision does not observe a rule saying the overall personnel expenditure set in the general strengthened budget cannot be increased during the budget year on the occasion of the budget revisions, the Council explained.

The body underscores the draft budget revision also fails to observe a rule regarding the budget revisions saying the overall general strengthened budget expenditure, less the financial assistance from the European Union and other donors can only be increased upon the budget revision for the payment of the public debt service and for the payment of Romania's contribution to the EU budget.

The budget revision features on the agenda of the Government's Thursday meeting.

According to the note substantiating the draft budget budget revision, the 2012 state budget revenues shall be cut by 2.158 billion lei and the expenditure shall be slashed 753.8 million lei or 0.12 percent of gross domestic product. The personnel expenditure shall rise 648.0 million lei or 0.1 percent of GDP, mainly as a result of the public sector wage rises.

The Romanian Government, by the draft budget revision, has revised the 2012 economic growth forecast downwards from 1.5 percent to 1.2 percent. The Romanian authorities considered an economic growth of 1.8-2.3 percent when drawing up this year's budget, to have been subsequently revised to 1.5 percent following the talks with the International Monetary Fund.
(1 euro=4.48 lei)


EU funds absorption in Romania remains low


Romania's EU funds absorption keeps recording a very low degree and there is the urgent need for more urgent and efficient measures aiming to improve the absorption capacity, the Tax Council informs in a document sent to the press regarding the 2012 draft budget revision.

The Tax Council suggests using the own resources more cautiously regarding the EU-funded projects, amid the uncertainty about the moment the EU shall reimburse the money to Romania.

In addition, the Tax Council considers the EU funds absorption must become the main priority for the Government, but, given the very low absorption recorded so far, more efficient and urgent measures meant to improve the absorption capacity must be drawn up.

The Tax Council believes that this goal is of vital importance, especially in the current European tense context placing constraints on the funding of the necessary investments in the economy.

'Therefore the EU funds absorption becomes essential in order to set off the negative effects caused by the European sovereign debt crisis upon the capital flows. In this respect, the Tax Council makes once again the recommendation to set up quarterly targets regarding the EU funds effective absorption, for each authorizing officer, to be monitored strictly and allowing the rapid correction of possible deficiencies,' the document also reads.

The amounts received from the EU in the account of the payments made are estimated to be lower by 2 billion lei (0.3 percent of GDP) in 2012, according to the 2012 draft budget revision.