Budget adjustment blueprint: Revenues 1.32 bln lei less, deficit 978.8 ml lei higher. Opposition criticizes the economic measures of the Government

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According to the draft Ordinance adjusting the 2017 state budget released on the website of the Ministry of Public Finance, revenues to this year’s state budget will be by 1.326 billion lei lower, expenditures will diminish by 347.7 million lei, while the deficit will grow by 978.8 million lei.

According to the substantiation report of the draft piece of legislation, revenues to the general consolidated budget increase overall by 1.060 billion lei, expenditures of the general consolidated budget go up overall by 1.705 billion lei and the deficit of the general consolidated budget stays at 2.96 pct of GDP in cash terms.

According to the said substantiation report, profit tax revenues go down by 1.785 billion lei, revenues from other taxes on profit, income and legal entities’ capital gains drop by 79.2 million lei, revenues from the income tax go up by 298.4 million lei, revenues from goods and services tax decrease by 1.395 billion lei. VAT revenue drops by 1.974 billion lei, of which 1.296 billion lei represent past due liabilities to the general consolidated budget (SWAP mechanism) transferred to other taxes and dues of the general consolidated budget, according to the budget execution.

Excises go up by 587.2 million lei, according to the positive budgetary impact estimated following the enforcement of the Government’s Ordinance No. 25/2017 amending and supplementing Law No. 227/2015 on the Tax Code, and revenues from social security contributions increase by 164.2 million lei.

Non-tax revenue goes up by over 2.038 billion lei, of which 2 billion in additional estimated revenues from dividends, as a result of the enforcement of OUG No. 29/2017. The amounts received from the EU/other donors on account of the payments effected and pre-financing under the 2014-2020 programming period are reduced by 493.3 million lei.

At the budget expenditure chapter, the draft provides for the following increases: staff expenses by 2.282 billion lei; spending with goods and services 317.2 million lei; spending with interests 500 million lei. Spending with subsidies will be trimmed by 313.4 million lei.

Transfers among public administration units go down by 1.37 billion lei; other transfers increase by 959 million lei; projects financed from post-accession non-repayable foreign funds are trimmed by 697.1 million lei; social expenditure advances by 2.53 billion lei (mainly for the disbursement of social assistance benefits); projects financed from 2014-2020 post-accession non-repayable foreign funds lose 3.48 billion lei.

Other expenses increase by 638.2 million lei, spending with repayable funding programs is cut by 219.9 million lei, capital expenditures drop by 1.583 billion lei.

The entities to receive extra funding are as follows: the Ministry of Public Finance (general actions) + 4.054 billion lei, of which 2.464 billion for pre-financing from the state budget in the event of that EU funding is temporarily unavailable; the Ministry of Agriculture and Rural Development + 1.501 billion lei overall, with an additional 1.775 billion lei for per hectare direct payment schemes, so that in advance payments for setting up the 2018 crops are fully covered (co-funding of the EAFRD-financed projects submitted under the 2014-2020 National Rural Development Program is also ensured); the Ministry of Internal Affairs + 1.16 billion lei, mainly for maintenance activities to keep aircraft operational, acquire intervention equipment and for the wages and pensions of the military personnel; the Ministry of Health + 207 million lei, mainly for the medical staff payroll; the Ministry of Labour and Social Justice + 95.9 million lei overall (expenditures go up by 795 million lei – mainly on account of social welfare disbursements) and balance transfers to the social security budget decrease by 596.6 million lei; the Public Finance Ministry + 426.6 million lei for payrolls and for compensations due under the property return law; the Ministry of Justice + 357.4 million lei, mainly for payrolls and compensations due under court rulings; the Romanian Intelligence Service + 298.9 million lei, mainly for payrolls and military pensions and major procurement programs; the Ministry for Business Milieu, Trade and Entrepreneurship + 247.9 million lei overall to finance programs supporting small- and medium-sized enterprises (250 million lei); the Public Prosecution Office + 203.5 million lei for payrolls; the Government’s Secretariat General + 181.9 million lei mainly for the wages of the clergy of the officially acknowledged denominations.

The institutions to have their budgets trimmed are the Ministry of Regional Development, Public Administration and European Funds, the Ministry of Transports, the Ministry of Communications and Information Society, the Ministry of National Education, from the amounts due for EU-funded projects. The budget of the institutions/activities fully or partly funded from their own revenues loses 598.3 milion lei for both expenses and revenues.

The broken down VAT amounts for the funding of spending of the authorities of public local administration are supplemented by 677.7 million lei.

The amendment of the budget revenues and spending of the 2017 general consolidated budget is the result of the 5.8 percent economic growth instead of the 5.2 percent considered when this year’s budget was built, and taking into account the GDP worth 837.1 billion lei in nominal terms compared to an initial estimation of 815.2 billion lei.

 

FinMin: Extra money for Presidency, Parliament, intelligence services, several ministries at upcoming budget adjustment 

 

The Presidential Administration, the intelligence services and the two Chambers of Parliament, as well as several ministries are among the institutions that will get extra money at the upcoming budget adjustment, Finance Minister Ionut Misa told a press conference on Friday.

“As a result of the 5.8 percent economic growth instead of the 5.2 percent considered when this year’s budget was built, and taking into account the GDP worth 837.1 billion lei in nominal terms compared to an initial 815.2 billion lei, the proposition was made to provide the necessary funding for supplementary expenditures at the following ministries: the Ministry of Agriculture – 1.775 billion lei; the Ministry of Internal Affairs – 1.160 billion lei; the Ministry of Health – 207 million lei; the Labour Ministry – 95.9 million lei; the Ministry of Finance – 426 million lei; the Ministry of Justice – 357 million lei; the Ministry of the Business Environment – 247 million lei.

Also in for a funding supplementation are all the intelligence services, the Presidential Administration and the two Chambers of Parliament, Misa said.

Conversely, the budgets of the Ministry of Regional Development, Public Administration and European Funds, the Ministry of Transport and the Ministry of Communications and Information Society will be diminished at the budget adjustment, added the Finance Minister.

He mentioned that 697.2 million lei have been made available to the local budgets, of which 350 million lei for the wages of pre-university teachers; 89.2 million lei for centers for persons with disabilities; 110.9 million lei for caregivers to people with disabilities; 69.1 million lei for the ongoing ‘Bun and milk’ school meal program. The social assistance and child protection directorates also have a supplementary 78 million lei allocated.

 

PNL’s Orban claims that next year, a quarter of the administrative-territorial units will go into payment default

 

PNL Chairman Ludovic Orban claims that next year, a quarter of the administrative-territorial units in the country will go into payment default because there are mayors or presidents of the county councils who wrongly applied the salary grids, until they “drilled the budget”.

Ludovic Orban stated on Saturday at Jupiter, at the opening of the Liberal Women Summer School, that PNL has the obligation to attract as many categories of people as possible.

“National Liberal Party has the moral obligation to start thinking for the society, to enter a constant and permanent dialogue with people. Of course, we will not dialogue with everybody. There are categories of people that we will never be able to attract on our side, there are usual cadgers, usual clients of PSD and of PSD’s populist statements, and it would be very difficult for us to attract them on our side. But we have to try to attract all the other categories of people on our side”, Orban stated.

He says there are certain groups where PSD is dominant and where there’s a possibility to win if the Social Democrats will make mistakes, and he gave the example of the pensioners and of the special pensions.

“We already know that there are certain groups where PSD is dominant and where it’s very difficult to win the battle. You can win only in certain circumstances in which they make mistakes and you have the capacity to give a courageous message. An example: we can attract pensioners if we support the abolition of the special pensions. Tis message is tested. I can tell you that today, the large majority of the people, not only the pensioners, accept this message: special pensions should not exist anymore. We assume in political terms this responsibility to clearly support that all categories of employees should be contributing. If we assume this, I believe we get an advantage. Also in the segment that currently is dominated by PSD, among the pensioners that are going to vote, 60-65 percent are voting PSD”, Orban stated.

He said that another segment that could be attracted to PNL is “public servants”, particularly those from the state system and less from the local administration.

“We can also give a message for the public servants, a message coming from them actually: we should make them see that all the promises for salary grows from the campaign were lies. The transfer of the contribution quotas from the employer to the employee is actually a shell game, hocus-pocus, a trick, in which most of the salary grows of the gross salary of the budgetary employees is going in the state’s pocket, not in the employee’s one. I believe that due to that trick they made, we can attract many public servants on our side” explained the PNL Chairman.

Orban claimed that next year, 25 percent of the administrative-territorial units will go into payment default.

“Generally in the local administration, by allowing local authorities to apply the salary grids, mayors have won in some localities, while they have lost in others. This is because there are mayors or president of the county councils who didn’t let themselves attracted by populist temptations to increase salaries until drilling the budget. I tell you, next year, remember what I say, 25 percent of the administrative territorial units will go into payment default. It may start this year” the Liberal leader mentioned.

 

Turcan: The Government has cut money from health and education investments to pay salaries. The budget was untrue

 

PNL Prime Vice Chairman Raluca Turcan claims that the 2017 budget was “untruly” presented by PSD-ALDE, since there are enough money for salaries only for the first 9 months of the year, so now there are “sacrificed” sectors like health and education in favor of the other expenses.

“I have warned many times that e budget ‘built’ by PSD-ALDE is untrue, and there will be enough money for salaries only for the first 9 months. Now they’ve found money, but they waived the investments, the development, and I dare to say, the future! The economy “whirrs” only on the paper! In fact, the state has become only a net payer of salaries” says the PNL Prime Vice Chairman.

She accuses PSD of waiving the state’s attributions like providing infrastructure, health, quality education and well-being because of the decision to cut the money for investments.

“Schools will remain without operating licenses. Hospitals will be the same with the ones where our grandparents were treated. Bad roads will continue to take lives. Villages will remain in the 19th century – they will stay underdeveloped. This is the reality offered by PSD-ALDE – a Government that is interested only in electoral sympathy, without having an economical view for the future” the Liberal leader stated.

 

USR: The Government is lying the Romanian people with a positive adjustment and sacrifices investments again. It refuses to admit its incompetence

 

Save Romania Union (USR) claims that the budget adjustment made by the Government should have been a negative one, since revenues have decreased and expenditures have increased, the document being a lie, and the Executive led by Mihai Tudose refuses to admit its “incompetence”.

“The Save Romania Union party warns that the PSD-ALDE Government manipulates the figures of the state budget in order to present a positive budget adjustment in which the state’s revenues and expenditures are growing. Actually, the Tudose Government refuses to admit its incompetence and to officially admit that the budget adjustment reflects the disastrous situation of the public finances after eight months of PSD-ALDE government” reads a press release of the party.

USR claims that, despite the positive adjustment presented by the Government, the reality shows that “the revenues and expenditures of the state budget are decreasing and only the budget deficit is increasing”.

“Besides the manner of defining this budget adjustment, it is a negative adjustment in fact, because funds amounting almost RON 10 million are cut from the investments in infrastructure and European projects, and they are transferred to the expenses with salaries and pensions” stated MP Dan Barna, USR’s spokesman.