Romanian Govt. plans more spending under budget revision despite record trade gap

The leaders of the ruling coalition sketched a budget revision draft in their meeting on September 16, distributing among ministries what they estimated to be RON 10.4 billion revenues above target, according to Agerpres quoting sources familiar with the negotiations, Economica.net reported.

Although sources failed to explain this, the government will also cut the allocations initially planned for some sectors – most likely the co-financing of projects funded under the EU schemes (Resilience Facility and multiannual financial framework). Specifically, some sectors will see their budgets cut by RON 17.4 billion, judging from the data circulated by Agerpres.

Romania's budget deficit topped 4% of GDP in January-June and reportedly 4.4% of GDP in January-July, compared to a 5%-of-GDP full-year target unofficially lifted to 6.9% of GDP. Admittedly, the gap was prompted by expenditures well above target rather than disappointing revenues.

However, the Romanian ruling coalition reportedly already shared the "excess revenues" among ministries.

There will be four large areas that receive extra money: public health (+RON 11.4 bln, with the sector's budget reaching a historic level of 4.2% of GDP or RON 74 bln); education (+RON 6.4 bln); transport (+RON 5 bln); and regional development (+RON 5 bln).

With RON 27.8 bln distributed only to these sectors and only RON 10.4 bln in excess revenues, the government must cut significantly the funds initially envisaged from the beginning. Most likely, the slow absorption of EU funding particularly under the Resilience Facility, diminished the co-financing needs.

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