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January 28, 2023

Draft budget 2019: 5.5pct economic growth, 2.8pct annual average inflation, 2.55pct cash deficit. USR’s Barna: 2019 budget is of lies, pushing Romania into crisis. PNL’s Orban: Budget blueprint in the realm of science fiction, we will table substantive amendments

The state budget for 2019 is built on a 1.02 billion lei gross domestic product representing a 5.5pct economic growth against 2018, a 2.8pct annual average inflation and an estimated 2.55pct budget deficit of the GDP (cash) and a 2.57pct of the GDP (ESA), according to data released on Thursday night by the Public Finance Ministry (MFP).

In 2018, the GDP saw 949.6 billion lei, according to MFP data, representing a 4.5pct increase against 2017, and the annual average inflation parked at 4.63pct.

Unemployment rate will slightly dip in 2019 to 3.2pct from 3.31pct in 2018, meaning that at end- 2019 the number of the unemployed will count for 287k people.

The net average income grows to 3,085 lei in 2019, from 2,685 lei in 2018, and the average number of the employees is estimated to go up to 6.655 million people, from 6.525 million people in 2018.

The revenues of the consolidated general budget for 2019 are projected at 341.4 billion lei, respectively 33.4pct of the GDP. According to estimates, the largest revenues are foreseen for the social insurance contributions – 11.5pct of the GDP, a 6.8pct VAT collection, excises – 3pct of the GDP, taxes on income and pay – 2.3pct of the GDP.

The spending of the consolidated general budget for 2019 is estimated at 367.5 billion lei, representing 35.9pct of the GDP. The largest share in the GDP is represented by the social care spending – estimated at 109.8 billion lei, respectively 10.7pct of the GDP (the same share as in 2018) and the staff spending – amounting to 102.5 billion lei (10pct of the GDP), yet on the medium term (2019 – 2021) a dropping trajectory of their share in the GDP is forecast. The spending with the goods and services are estimated at 46.5 billion lei (4.5pct of the GDP), up by 1.8 billion lei against 2018. Out of this increase, 1.5 billion lei is the budget of the National Single Fund of the Social Health Insurance.

According to the MFP, the main targets of the state budget for 2019 are the backing of the public investment, the education and health.

The spending with the investment are forecast at 46.8 billion lei (4.57pct of the GDP), up by 12.5 billion against 2018.

The expenditure with the public debt interest rates, estimated at 13.5 billion lei, see a smaller share in the GDP, of 1.3pct for 2019 vs 1.4pct in 2018.

The Health care is added rd 5 billion lei vs 2018, which means a 12pct growth.

The Education receives in addition to the share of 2018 some 9.8 billion lei, meaning a 47pct up.

The state budget for 2019 has also covered a 2pct of the GDP allocation for the Defence sector, as assumed by Romania to their NATO partners.

“The necessary amounts of money were ensured for the pensions’ increase by 15pct starting with September 2019, which is a 6.5 billion lei in addition to the state security budget.

For the support of the business milieu, the state budget for 2019 includes a series of commitment loans for several programmes.


USR’s Barna: 2019 budget is of lies, pushing Romania into crisis


The Save Romania Union (USR) chair Dan Barna considers that the budget proposed by the Government for 2019 is a budget “of lies and of pushing Romania into crisis”, it is based on “aberrant” revenues and the expenditures are “impossible to cover”.

“This budget is the consequence of the photo that all the press presented last week with six people who decided on the future of Romania, three of whom have criminal convictions. The six people decided this budget, which I would call a budget of lies and of pushing Romania into crisis. (…) The revenues this budget is based on are aberrant. We are talking about an increase of 5.5pct in the conditions where we had 4pct last year, given that Europe is in stagnation and under the conditions that all European economic growth is on a downward trend. We are basically talking about some incomes that cannot even be theoretically attainable: probably a 2 to 3pct increase would be related to reality,” Barna said on Friday in a press conference.

“In the case of investments, we are presented with a fantasy by Mr. Valcov [prime minister’s adviser]. If we had a 3pct increase in the last two years, we are now promised a 4.6pct. He has no references in the budget that can make them possible,” Barna said.

Referring to the “increase in resources left to the big cities”, he said that this is “doubled by aberrant spending to be covered by these cities.”

“It is just a PR image that Liviu Dragnea has sold to the mayors he has. From this budget, I think that the localities are just victims and not the beneficiaries”, added the USR head.


PNL’s Orban: Budget blueprint in the realm of science fiction, we will table substantive amendments


The 2019 budget blueprint is in the realm of “science fiction” and the National Liberal Party (PNL) will submit substantive amendments to help improve it, Liberal Chairman Ludovic Orban said on Friday.

“A budget in the realm of science fiction, because it is based on fiction about its fundamentals, specifically an inflation rate of 2.8 pct. Let’s recall that at the moment the PSD-ALDE ruling coalition took over government, the annual inflation rate was almost zero, it soared to an annualized 5.4 pct, and is currently 4.6 annualized, or, with a collapsing domestic leu, chain price hikes in the pipeline due to rising costs of electricity and natural gas, we will obviously have an inflationary flare-up and obviously the 2.8 pct inflation rate proposed in this budget is science fiction, it’s a lie. The euro-leu exchange rate, although at 4.76, is set at 4.67 lei for 1 euro in the budget draft. It’s a brazen lie, because the leu will continue to weaken, because the negative phenomena that happen in the economy will certainly affect the strength of the national currency and will implicitly lead to the leu further losing ground to the euro,” said Ludovic Orban.

According to him, “the 5.5 pct economic growth is also a false premise” as long as all the forecasts made by prestigious international institutions point to an economic growth of 4 pct at the most, and growth will most likely not exceed 3 pct.”

The PNL Chairman added that the government has not fulfilled its obligations as regards the Army endowment program either, because “it wasn’t able to spend 2 pct of GDP for Defense, to support the procurement program, and all procurement procedures are currently blocked.”


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