Romania’s public budget revision, which is reportedly under debate with the Government’s social partners, could envisage a deficit of 4.1% to 4.3% of GDP for this year, according to HotNews.ro, quoting sources within the Finance Ministry.
Prime minister Ludovic Orban confirmed that revising the budget planning "is extremely difficult" since the past Government’s budget execution has left the public finances in dire situation.
The emergency ordinance (OUG) including the revision should be completed by Tuesday evening and will be approved by the end of this week, PM Orban said on Monday, November 25.
The resources will be directed to cover the most urgent needs first: wages, social benefits and the funds needed by local administration for current expenditures. Then, the Government will earmark part of what is left for disbursing VAT owed by the state to companies, as the former cabinet has delayed such payments.
Finally, the money owed to companies for the medical leaves will also be covered. The National Health Insurance House (CNAS) has been disbursing the money owed to companies for medical leaves with a delay of 11 months.
The money left will be used to pay for some of the projects financed under various government-funded investment projects such as the National Programe for Local Development (PNDL).
As regards the specific re-allocation of funds, Realitatea Plus quoted by Adevarul daily confirmed that money would be moved from the Ministries of Education (RON 2 billion), Internal Affairs (RON 1.2 bln), Transport and Agriculture (RON 1 bln each) and will be reassigned to the Ministries of Labor (RON 4 bln), Health (RON 3 bln), and Regional Development (RON 1.8 bln).
Romania’s GDP is estimated around RON 1,000 bln (EUR 220 bln) this year. Part of the resources, to cover the difference between the 2.76% of GDP target deficit and the 4.1%0-4.3% revised deficit (some EUR 3.3 bln in total) will have to come from the Government’s buffer at the Treasury - a move likely to push up the cost of public borrowing.
Romania’s Government has been paying back the VAT to companies with an average delay of “perhaps more than 90 days” and...