The Ministry of Education, Ministry of Labour, and Ministry of Agriculture had their expense budget entirely cut. Additional money for intelligence agencies, anti-corruption national directorate and magistrates’ council.
As Prime Minister Victor Ponta announced already on Monday the Cabinet and the international lenders reached agreement over the budget revision, which was approved at the government meeting yesterday.
‘First of all, we agreed together to accept a rise based on economic growth that exceeded the initial prevision, a growth of the Gross Domestic Product (GDP) by RON 2.6 billion and an aggregate Government deficit increased from RON 13.4 billion to RON 14.7 billion. These funds were anyway provided for the infamous National Infrastructure Development, but since we managed to close it, we can use the money for other things. The guarantee ceiling was raised by RON 2 billion to boost and support some national programmes such as the First Home programme for first-time homebuyers. There are also other programmes where the guarantee ceilings will be raised. At the same time, net loans for European funds increased to RON 3 billion,’ Ponta told a press conference at the Government House, Agerpres informs.
His statements came after he met officials of the Monetary International Fund (IMF) at a meeting were also attending were Finance minister Daniel Chitoiu, Minister-delegate for Budget Liviu Voinea and Minister for European Funds Eugen Teodorovici.
‘We have reached agreement with our international partners on this summer’s budget revision,’ said Ponta.
According to Mediafax, the Ministries of Education, Labour, Transport and Agriculture are on the list of institutions whose total expense budget will be cut back with the first budget adjustment of the year, while Regional Development, the Justice Department, Internal Affairs, SRI (Romanian Intelligence Service), SIE (Foreign Intelligence Service), DNA (National Anticorruption Agency) CSM (Superior Council of Magistracy) will receive additional funds. Budget cuts will also be carried out in the sectors of Presidential Administration, Chamber of Deputies and the Constitutional Court.
The Ministry of Education budget will be cut by RON 235,6 billion (initial budget of RON 8,5 billion), resulting from the RON 40 million increase of funds for school, kindergarten and university campus rehabilitation, and the concomitant 10 percent reduction of the blocked amount.
The biggest cut of RON 1,1 billion (initial budget of RON 30,44) will be incurred by the Ministry of Labour, in accordance with state budget savings reported for “Social service” actions in the first six months of the year, as well as the savings reported for actions financed by the state social insurance budget, for which balancing transfers are ensured by the ministry budget. Following yesterday’s governmental decision, the social service expenses covered by the unemployment budget will be increased by RON 60 million for payment of unemployment indemnities to a number of 158.000 unemployed persons on average a year, compared to 149.000 unemployed persons on average at the start of last year’s budget drafting. Expense cuts will be carried out at the Ministry of Agriculture as well (RON 61,1 million from an initial budget of RON 17,28 billion), Ministry of Culture (RON 5,2 million from an initial budget of RON 578 million), Ministry of Economy (RON 6,3 million from RON 1,26 billion initially), Ministry of European Funds (RON 53,5 million from RON 184 million), Ministry of Transport (RON 953,5 million from RON 7,29 billion), etc.
The following institutions will receive additional budget appropriations: the Ministry of Health (over RON 1 billion from an initial budget of RON 8,68 billion), Ministry of Regional Development and Public Administration (RON 943,3 million from RON 2,55 billion), Ministry of Justice (RON 159,6 million from RON 2,34 billion), Public Ministry (RON 20,5 million, of which RON 2,9 million for DNA, from RON 654,9 million), Ministry of Internal Affairs (RON 228,3 million, of which RON 116,2 million for activities subject to the First Extended Detailed Annex of the contract concluded with EADS, from RON 8,3 billion), Ministry of Defense (RON 156,2 million from RON 5,64 billion), Ministry of External Affairs (RON 51,3 million from RON 636,5 million), SRI (RON 30 million from RON 1,04 billion), Ministry of Environment (RON 31 million from RON 2,2 billion) and SIE (RON 10 million from RON 182,6 million). Other additional funds will be provided to the Senate (RON 184.000 from RON 85,6 million), ANI (National Integrity Agency, RON 3,6 million from RON 27,2 million), Special Telecommunications Service (RON 300.000 from RON 248,5 million), and CSM (RON 8,6 million from RON 89,5 million).
Voinea: Economic growth estimated at 1.6 pct of GDP in 2013
Romania’s economic growth was revised upwards, from 1.6 to 1.9 percent, for 2013, with no supplementary revenues afferent to this advance in the GDP having been provisioned in the budget, Minister for Budget, Liviu Voinea, stated Monday. Voinea specified that the new GDP was estimated at RON 626.2 billion, higher by RON 1.6 billion, with the cash deficit having grown from 2.1 percent of the GDP up to 2.3 percent, while the budget deficit calculated based on the ESA methodology of the European Union staying unchanged, because of the financial resources that extend the cash deficit were already contained in the previous letter of intent and memorandum, for the National Infrastructure Development Programme (PNDI).
According to the Minister Delegate for the Budget, after the rectification the revenues were reduced by RON 1.9 billion, while the budget expenditures were reduced by RON 700 million. Consolidated budget execution after the first semester ended with a deficit of RON 6.63 billion, or 1.06 percent of the GDP, according to data provided by the Ministry of Public Finance (MPF).
FinMin: Authorities seek to cut bread and baking industry tax evasion to half this year
Through the freshly adopted measure of cutting the VAT rate for bread, the authorities envisage curbing the tax evasion in the bread and baking industry to more than half, not an immediate price reduction, said Minister of Public Finance Daniel Chitoiu.
‘The VAT reduction is aimed at creating a competitive market where all the producers pay VAT. Our major objective, just as we announced on several occasions when we proposed to reduction of the VAT rate on bread, is not an immediate price decrease, but a significant reduction in tax evasion. According to analyses conducted by the major producers and also to our own analysis, on certain segments of the chain, tax evasion can be as high as 80 pc,’ said the Minister of Public Finance.
The MFP official said that the authorities want to reduce tax evasion in this industry by over 50 pc this year, adding that the new control structure created by the reorganization of the tax authority will be more efficient.
Aurel Popescu, chairman of ROMPAN (The Romanian Employers’ League of the Milling, Bakery and Flour based Products Industry) stated that tax evasion in the milling and bakery sector may be reduced from 67 pc to 20 pc within six to eight months (the equivalent of a reduction from RON 1 billion at present to approximately RON 200 million) after the 9 pc VAT for bread is implemented and the price of bread may decrease with approximately 15 pc, money.ro reports. He also mentioned that a meeting will take place today between authorities and representatives of the milling and bakery industry, which will be attended by 500 producers in this field. The aim of this meeting is to conclude a partnership and “create a healthy business environment”.
According to PM Ponta, every person who buys bread must request a fiscal receipt as otherwise reducing VAT on bread will mean only “damage in the budget”.
The Romanian authorities reached an agreement with the IMF and international partners regarding the adjustment of this year’s budget, which also provides the reduction of the VAT rate along the bread production chain from 24 pc to 9 pc; the measure is expected to have a negative budget impact of RON 100 million over September – November 2013, and of RON 400 million annually.
The international financial institutions are sceptical of this measure’s efficiency in curbing tax evasion, but accepted that it be introduced along a set of measures to increase excise taxes so as to offset the decline in budget revenues.
Additional warranties for the “Prima casa” project
The budget adjustment approved yesterday also increased this year’s warranty limit for credits in the “Prima casa” programme by RON 1 billion, of which RON 300 million will be provided to persons who plan on purchasing ANL homes through a “Prima casa”-type credit. The warranty is given and paid only in national currency, meaning that the loans included in this programme will be given only in RON. Banks that wish to give out warranty credits must offer an interest determined using the RONBOR formula: three months plus a margin of maximum 2,50 pc per year.