First budget rectification this year. Most ministries receive supplementary funding


The only fund cuts affect the ministries of Finance and Environment. The rectification plan agreed upon with the IMF and EC will be approved in a special cabinet session Friday.

Prime-Minister Victor Ponta yesterday unveiled the plan of the first budget rectification of this year, which will be approved Friday in a special session of the cabinet, as it was agreed upon with the International Monetary Fund (IMF) and the European Commission (EC). The second rectification will be made toward the end of September, after new consultations with the international partners and based on the new documents that will come into force.
The ministries of Health, Defense, Economy, Education, Transportation, Labor, Culture, and Interior, as well as the Permanent Electoral Authority, will receive supplementary funding, while spending cuts will be operated at the ministries of Finance, and Environment.
The Ministyr of Health will receive RON 489 M for the expenses relative to national programs and the system of emergency interventions, the National House of Health Insurances – RON 166 M, Defense – RON 400 M, Economy – RON 300 M, of which RON 100 M for the ‘de minimis’ support scheme for SMEs and RON 200 M for retechnologization investments, Education – RON 150 M for the payment of salary rights won in court, Transportation – RON 356 M, mostly for the debts and subsidies of CFR, Interior and the Permanent Electoral Authority – RON 192 M, Labor – RON 42 M, Culture – RON 10 M.
An additional sum of RON 600 M will be allotted to the payment of local authorities’ arrears towards suppliers, which in turn have debts to the state budget, as part of an operation of compensation.
“The Ministry of Defense has funds provided for possible expenses in the near future, which will be committed, and because of this we moved them to the reserve Fund and will be disbursed as they are committed. I discussed with the minister of Defense this morning and, until the end of the year, we plan that this spending increase for Defense, in a moment that is sensitive, important and difficult for the region reaches 0.2 pc of the GDP,” PM Victor Ponta explained.
The Ministry of Finance will lose RON 750 M allocated for general expenses, while the Environment will be RON 25 M poorer, as the delegate minister for Budget, Liviu Voinea said that these are the “main” institutions that will have their funds diminished. No modification will be operated to the budgets of the Presidency and Parliament.
The estimated incomes to the consolidated general budget will advance by RON 1.07 bln, while expenses will be revised upwards by RON 1.34 bln, but the budget deficit target will be maintained at 2.2 pc of the GDP.
“For now, expenses with Defense are included in the 2.2 pc deficit, but until the end of the year they could probably materialize in an increase of the deficit with this sum, but at this moment our accord with international partners is maintaining this target unchanged. The Stability and Growth Treaty, which also includes the deficit target which Romania must attain until 2015, of 1 pc structural, 1.4 pc on ESA and 1.6-1.7 for cash, clearly stipulates that certain expenses determined by exceptional circumstances are not taken into consideration in the calculation of the structural deficit. It rests that, in the coming interval, the Councils of finance ministers of the EU decide what <<exceptional circumstances>> mean, for all states, and if the situation of Ukraine and the defense spending caused by this situation range within the provisions of the Fiscal Treaty, in which case the deficit can be increased,” Voinea explained.
In June, PM Ponta announced that the budget deficit for this year will increase by RON 700 M, representing expenses for the Ministry of Defense, a situation that has been negotiated by the minister of Budget, Liviu Voinea with officials of the European Commission.
Expenses at half the sum budgeted on EU funds
The delegate minister for Budget, Liviu Voinea explained yesterday in a press statement at the Victoria Palace that the budget rectification is positive, because supplementary incomes were obtained from other sources than estimated, such as RON 350 M from the claw-back tax and RON 700 M from the sale of green certificates. He added that no investment funds were cut.
Budgetary spending for the programs financed from EU funds were achieved at less than half the planned figure during H1, while the incomes from EU funds were under the planned sum as well, minister Voinea stated. “It is true that not all the incomes were achieved in terms of European funds, because not all expenses were made either, but we did not intervene on the chapter of European funds in the budget rectification, to allow all credit takers to achieve the absorption programmed at the beginning of the year, estimating that there still exist all conditions for this absorption to reach the planned level. There is a seasonality of works and expenses in infrastructure,” Voinea said, when asked at the government about the source of the difference of incomes and expenses invoked by President Traian Basescu.
Voinea explained that credit takers were allowed to achieve the expenses and incomes in the second half of the year, so that the absorption target is not endangered. He added that money was saved by the Labor Ministry, so the rectification does not mean a proper cut, because this ministry will spend more than last year.
The delegate minister for Budget also mentioned that there was no talk with the IMF about an increase of the contributions to health insurance, assuring that this topic has not been approached during the last two years, since he participates in the discussions with the international financial institution.