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The budgetary deficit for 2019 is evaluated at 4.98% out of GDP


Tension is high in the ministry of finances after the first calculations showed that the budget deficit is 4.98% of GDP for the draft consolidated budget for 2019 due to the slowing down of the economic growth and the increase of budget-paid employees’ salaries, says Ziarul Financiar.

This means that two percentage points of GDP over the limit of 3% accepted, namely a surplus of the income by  expenditure by another 20 billion lei (4.3 billion euro) against the 30 billion lei (6.4 billion euro) deficit which was 3% of GDP.

The GDP for 2019 according to the prognosis commission is estimated at 1,022 billion lei.

ANAF collected in 2018 according to the most recent data income of 245  billion lei with 15% more than 2017 and 104% against the initial programme in the approved budget for 2018. Similarly, the collections are 0.3% bigger against the programmed income in the second budgetary  rectification.

The growth rhythm for collection was 5% higher than the growth rhythm of nominal GDP in 2018. GDP was 949 billion lei in 2018 against 859 billion lei in the previous year.

The income collected by ANAF in 2018 were the highest in the history of the institution with a record obtained in July 2018 when there were collected 26.8 billion lei, most money collected monthly by ANAF since its establishment to the present.

For 2019, ANAF was required a growth of 15% of the budgetary collection against a growth of the nominal value of the GDP of 7%.

The draft budget is hard to build to get a budgetary deficit under 3% of GDP taking into consideration the growth of expenditure with salaries and pensions and the reduction of the economic growth.

The prognosis commission goes on a surplus of GDP of 5.5% in 2019 against 4.3% as it was supposed to get in 2018 but the majority of the analysts state that this year the economy will have a brake.

The 4.98% of GDP was estimated without taking into consideration the implementation of the special taxes for banking assets and 2% on the turnover of the companies in telecom, energy and gambling.

According to the Emergency ordnance 114/2018 published by the Official Gazette 1.116 of 29 December 2018 the banks will have to pay a tax for the financial assets calculated depending on the average between Robor for 3 and 6 months. For an average of the two quotations of 3.12% as it was yesterday, the tax was 0.3% of the assets.

It is  not clear if the tax will be applied tri-quarterly or annually. If it is applied tri-quarterly for total banking assets of about 100 billion euro, the state will get 1.2 billion euro. If it is applied annually, it will get 300 million euro.

From the companies in energy,  which had a turnover of about 58 billion lei in 2017, the tax of 2% will get almost 1.16 billion lei (250 million euro) and from the companies in telecomm which had a turnover of 18 billion lei the tax will get almost 350 million lei(80 million euro). From the gambling companies, with turnover of 8 billion lei, the tax will get 160 million lei (35 million euro).

As a total through the new supplementary taxes, if they apply to the banks a tax for assets in a tri-quarterly way, the government could collect 1.5 billion euro, namely almost 7 billion lei, but the problem is that they need 20 billion lei.

Here comes the pressure on ANAF to collect 15% more than the previous year.

Expenditure with salaries would reach 100 billion lei in 2019 namely almost 10% of the GDP against 9% for the budget-paid employees in 2009  when the economy got into crisis. The stagnation of the expenditure with the salaries at the level of 2018 would economize 1% of GDP for the budget namely the 10billion lei necessary as a supplement, for keep to the 3% target.

The delay in the publication of the draft budget is unusual. The 2019 budget should have been presented in October and voted in November. As there is no new budget all state institutions follow the 2018 budget.

If the budget does not close under 3% of GDP new taxes or expenditure cuts are possible.

The ANAF chairman Ionut MIsa former minister of finances was replaced on Thursday 3 January 2019 with Mihaela Triculescu from Craiova,  by profession liquidator, unknown to the public eye, as her CV was not made public. The change had been planned before 1 January.