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March 25, 2023

PM Ponta confirms budget deficit increase to 2.5 pc of GDP

Budgets for most of the ministries will be reduced in the second budget rectification of this year, the figures in the draft rectification shows.
Premier Victor Ponta confirmed the news about the increase of the budget deficit, through the rectification, from 2.3 pc to 2.5 pc of the GDP for the co-financing of European programmes, Mediafax informs. “I want to confirm that, in the talks between the Ministry of Finance and the delegate minister for Budget with the delegation of the IMF, European Commission and World Bank, also based on this somehow unexpected success for them (the increase of the absorption level of EU funds) – as they kept hearing in the previous years that we would have European money and they stopped believing it, now we have it – in order not to affect the rest of budgetary activities, we will have a deficit increase of 0.2 pc only for co-financing European programmes. As they saw this increase of payments and disbursements on European funds, they allowed us to have an increase compared to the initial budget,” Ponta explained. He added that the rectification will secure funds for the salaries of graduates hired by the Ministry of Interior, for teachers and doctors.
The budget rectification will raise the deficit from 2.3 pc to 2.5 pc of the GDP, a difference which the IMF experts accept only for the sums spent additionally to the initial programme for co-financing the projects with European funds, official sources announced, quoted by Mediafax. The general consolidated budget might thus increase this year from RON 14.7 bln, as mentioned in the letter sent to the IMF in September, to RON 15.9 bln. Simultaneously, authorities agreed with the IMF upon a slight downward adjustment of the GDP forecast for this year, from RON 626.2 bln to RON 625.5 bln, because of a decreasing deflator.
In the latest forecast issued by the National Prognosis Commission (CNP), the GDP estimation for this year was made using a deflator of 4.4 pc, while the increase of industrial production prices was expected to reach 4.6 pc at the end of 2013, with an annual average of 4.7 pc.
CNP also operated with an average annual inflation of 4.3 pc and a 3.5 pc increase of consumer prices (December/December). According to INS data, industrial production prices soared in August, compared to a year ago, by 0.6 pc, while the annual inflation rate dropped in September to 1.88 pc, very close to the historic minimum registered in the spring of 2012, when it reached 1.8 pc.
The same sources added that the budget rectification operated by the government will be under RON 3 bln, with the focus on the funds not spent, which will be subject to a statistical analysis made by authorities this week.
The budgets of the ministries of Labour, Development, Environment, Transportation, Economy, Agriculture, Health, Information Society, and Defence will be reduced in the second budget rectification of this year, while extra money will receive the Interior, Justice, Foreign Affairs and the Chamber of Deputies. The figures are presented in the draft rectification.

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