ECONOMY FINANCE&BANKING

FinMin Teodorovici: Gov’t approves second budget revision: 9.5 billion lei in additional revenue,10.7 billion lei in outlays

The Government approved on Friday the second budget revision of 2018, and compared with the initial provisions there are now 9.5 billion lei in additional revenue and 10.7 billion lei in additional outlays, said Minister of Public Finance Eugen Teodorovici said at the Government House on Friday.

“Budget revisions are made to reconcile economic realities with public finances. We started from an initial budget built on certain macroeconomic assumptions and we honour our commitments. We started with five big commitments that we are fully meeting. We have been implementing the measures of the governing programme, the economic stimulus measures and the social measures, both of which are mission accomplished. The budget falls within the deficit target, below 3pct of the Gross Domestic Product (GDP), the target is respected, we do not increase the share of government debt in the GDP, another target respected, we consolidate the ministry’s treasury reserves, and we secure the military acquisition spending, as pledged. We also provide the necessary financing for the smooth preparation of the [Greater Union] Centennial celebrations and for assuming the Presidency of the EU Council, also achieved objectives,” Teodorovici said.

He mentioned that at this revision there are 9.5 billion lei in additional gov’t receipts against the initial budget and 10.7 billion lei in additional outlays, also against the initial provisions. “Investment expenditures will be 40pct higher than the 2017 achievements (…) Also, Romania will maintain the share of government debt in the GDP at 35pct, the fourth lowest in the European Union. And of course the bumper account, consolidated at 31 billion lei, which provides more than five months of before tax financing,” added Teodorovici.

According to the data unveiled by Teodorovici, the balance of the government’s revenue in 2018 is increased by 831.4 billion lei, with the main influences expected to be reflected in the following receipt categories: profit tax of over 400 million lei, non-tax revenues of 2.3 billion lei in excess, and other amounts received from the European Union – plus 2.6 billion lei. The excise duty revenue is expected to decrease by 1.2 billion lei and VAT revenue by 1.9 billion lei.

After the second revision, the outlays of the national budget increase by 1.7 billion lei, of which staff expenses by 58.4 million lei, goods and services expenses by 224.2 million lei, interest outlays by approximately 994 million lei, subsidies by 98.3 million lei, social assistance expenses by 661 million lei. A decrease by 1.5 billion lei is expected in non-reimbursable external funds for projects.

The first budget revision took place in August this year. Back then, the Ministry of Finance, the Ministry of the Interior and the Ministry of Healthcare were the main beneficiaries of the redistributed funds, while the Romanian Intelligence Service, the Ministry of Research and the Ministry of Energy took the brunt of public fund cuts.

The European Commission on Wednesday requested an annual structural adjustment of at least 1pct of GDP in Romania to correct a significant observed deviation from the adjustment path toward the medium-term budgetary objective (MTO).

The European Commission has drawn attention to the fact that Romania’s public deficit has increased in Romania from 0.5 percent in 2015 to 2.9 percent in 2016 and is forecast to reach 3.3 percent in 2018, 3.4 percent in 2019 and 4.7 percent in 2020: this is the highest deficit in the EU.

 

FinMin Teodorovici : Some ministries estimated higher outlays; budgets were revised downwards

 

Minister of Public Finance Eugen Teodorovici said that some ministries, such as Education, Research, Culture estimated higher expenditures for this year, most of them for projects that benefited from European funds, which is why their budgets were revised downwards.

“The Ministry of Public Finance doesn’t cut budgets, for this is what they always say. The ministries estimated higher amounts than they actually needed this year for their ongoing projects. Most of these amounts were for projects that benefited from European funds. In order to avoid similar situations in the future, since this year will end soon, it is important that we learn our lesson for next year. And what we can do in this respect, namely the Ministry of Finance, when the ministries will ask for a certain budget next year, is to check if they have clear arguments saying the amount will indeed be spent. Meaning, if a project has not even started, let’s say, then it means that there will be an award tender, an assessment process that needs to be done, a contract that needs to be signed,” stated Eugen Teodorovici.

Asked about the situation at the Ministry of Transport, where funds are being cut by 1.16 billion lei, the Minister explained: “The reason for which these amounts are being reallocated must be discussed with each ministry separately, for they need to explain very clearly all those amounts, where they are coming from.”

“They need to explain why these amounts are being reallocated at this budgetary revision, but, I tell you, as a general fact, that on the one hand it’s about an overestimation they made in the beginning of the year, when the budget was drafted in the first place, and on the other hand, there were certain aspects, depending on the case, that perhaps made it impossible for them to spend the entire amount they asked for in the beginning of the year, starting with permits and up to the construction, blockages in acquisitions, if such situations existed, the lack of workforce for certain projects,” stated Teodorovici.

 

“Presidential Administration budget looks very good, they asked for approx.10 million, got 6 or 7”

 

Minister of Public Finance Eugen Teodorovici stated that the budget of the Presidential Administration looks “very good,” as this institution has got an additional 6 or 7 million lei in the budget revision approved by the Government on Friday.

“Definitely, their budget looks very good. I don’t have the exact information with me right now but, if I’m not mistaken, the colleagues from the Presidential Administration asked for approximately 10 million (…) in the second budget revision and I think that we’ve earmarked 6 or 7 million, if I’m not wrong. I don’t have the exact figure right now, but you will see it posted officially,” Teodorovici explained at the Victoria palace.

The Minister was asked by the journalists how the budget of the Presidential Administration looks after the budget revision, considering that this institution asked for additional funds.

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