The draft includes revenues of RON 201.9 billion and expenses of RON 216.4 billion.
The Ministry of Finance has published the state budget draft and state social insurance budget draft for next year on its official website. The budget drafts were determined based on a revenue prognosis of RON 201.9 billion and overall expense estimate of RON 216.4 billion, resulting in a deficit of RON 14.5 billion. Separately, the state budget is based on revenues of RON 100.8 billion and expenses of RON 119.1 billion, RON 47.7 billion of which are personnel expenses. The state social insurance budget was devised based on RON 51.8 billion in revenues and RON 52 billion in expenses. The net average wage used to determine the state social insurance budget for 2014 is RON 2,298. The budget is based on a deficit of 2.2 percent of GDP and a 2.2 percent economic growth.
More money for mayors
Moreover, according to the draft, the government will supply next year’s local budget from VAT with RON 15.3 billion, an amount higher than the funds allocated this year, but EU projects will have to be funded first and fund allocation for new works will not be granted unless on-going projects are ensured first. In other words, RON 2.1 billion of the overall amount to be allocated next year to local authorities from VAT will be assigned to financing decentralized expenses at county level, RON 11 billion will be assigned to financing decentralized expenses at the level of villages, towns, municipalities, districts, and the municipality of Bucharest, RON 363.3 billion will be assigned to financing expenses related to county and village roads (this amount will be distributed by official decision of the county council, in accordance with the length and technical condition of roads from each administrative-territorial unit, upon consultations among mayors), and RON 1.7 billion will be assigned to balancing local budgets of villages, towns, municipalities, and counties. “In 2014, chief credit accountants for local budgets will first finance the investment projects/new or on-going activities corresponding to projects financed through non-reimbursable external funds. New investment projects are prohibited from being funded if financing sources for on-going investment projects/activities are not ensured first, in order to guarantee that performance schedules/start-up deadlines or completion dates for implemented projects are complied with,” the document shows.
Frozen hiring, but higher state company wages
Next year, state companies will only be able to increase the estimate personnel size compared to this year upon special approval by the government or local authorities, but they will be allowed to increase wages in accordance with the inflation rate for 2014, regardless if they reported profit. “Economic agents who reported profit in the previous year can increase wage expenses incurred in the previous year by the level approved under revenue and expense budgets and by no more than the average price increase index forecast for 2014. Economic agents who have not reported profit in the previous year or receive subsidies or transfers from the state and local budget for exploitation activities can increase wage expenses incurred in the previous year by the level approved under revenue and expense budgets and within the limit of the wage increase percentage applicable to public sector personnel, but by no more than the average price increase index forecast for 2014,” according to the document. Increasing the monthly net average wage per employee will depend on the increase in labor productivity, the government states in the draft.
Contribution to mandatory private pensions increased to 4.5 pc
The draft also includes raising contribution levels to mandatory private pensions (2nd Pillar) from 4 percent to 4.5 percent of the employee’s net income. 2nd Pillar contribution levels determined for this year, namely 4percent, were 0.5 percent below the initial schedule, after the government decided to maintain the rate at 2 percent in 2009 because of the financial crisis. The contribution should reach 6percent by 2016, according to the legislation.