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September 26, 2022

Government approves first budget revision of the year. PM Ciuca: Budget revision is positive and backed by an increase in the GDP

The government approved on Thursday the first budget revision of the year, through which revenues increase by 30.4 billion RON and expenses by 33 billion RON. The consolidated general budget deficit remains at 5.8 pct of GDP.

Budget revision is positive and backed by an increase in the Gross Domestic Product (GDP), an increase of approximately 30 billion lei in the aggregate budget, Prime Minister Nicolae Ciuca said on Thursday at a government sitting.

“The highlight on today’s agenda is approving a budget revision, a positive budget revision backed by an increase in GDP; we are talking about an increase of approximately 30 billion lei in the aggregate budget. We also have the figures provided by to the National Institute of Statistics for the first six months to confirm that the measures taken by the government have succeeded in generating growth in the Romanian economy despite the crises we have been going through and the unforeseen expenses generated by both the energy crisis and the security crisis at the border of our country,” said Ciuca.

He added that data provided by the INS indicate an increase in the second quarter of 5.3% compared to the similar period of 2021.

“And, of course, in the first half we have an increase of 5.8% as against the first half of 2021,” said Ciuca.


Government increases budget of state aid scheme to stimulate investments with major impact on economy


The government increased the total budget of the state aid scheme with the objective of stimulating investments with a major impact on the economy by about one billion RON, from 6.380 billion RON to 7.379 billion RON.

The Ciuca Cabinet amended, in the Thursday meeting, Government Decision (HG) no. 807/2014.

According to a press release from the Government, the measure was taken considering the interest shown by the business environment for this scheme, with as many as 193 investment projects submitted in the June 15 to July 26 session, some of them having large values.

“The state aid scheme envisages the financing of investments made by enterprises in tangible and intangible assets of high technology in the amount of at least 4.5 million RON. The objective of the scheme is to support regional development by making investments in the sectors of activity that create products with high added value. The investment projects under implementation will have a significant impact on the economy by creating 21,680 jobs and paying contributions to the state budget in the amount of over 6.19 billion RON,” the press release states.


Interior Ministry budget supplemented to settle food and accommodation expenses of refugees from Ukraine


The government decided, in Thursday’s meeting, to supplement the budget of the Ministry of Internal Affairs with 30 million RON, from the Reserve Fund of the Executive, for the settlement, from the budget of the county inspectorates for emergency situations and the Inspectorate of Emergency Situations Bucharest – Ilfov, of food and accommodation expenses for foreign nationals or stateless persons in special situations, coming from the armed conflict zone in Ukraine, hosted by natural persons.

“In order to establish this amount, the granting of a financial support of 20 RON/accommodated person/day was taken into account to cover the expenses necessary to provide food and a financial support of 50 RON/accommodated person/day to cover the expenses necessary to provide accommodation, to an average number of 14,000 foreign nationals or stateless persons from the area of the armed conflict in Ukraine, as well as beneficiaries of the Implementing Decision (EU) 2022/382 of the Council of March 4, 2022, for a period of 30 days,” shows a press release of the Government.

Also, the MAI, through the General Emergnecy Management Inspectorate, will be responsible for how the allocated amount is used, with the amounts remaining unused to be returned to the Budgetary Reserve Fund at the Government’s disposal until the end of 2022.


FinMin Caciu: Budget revision has mainly taken into account the financing of the economic and citizen support packages


The budget revision has mainly taken into account the financing of the economic and citizen support packages approved by the government this year, Finance Minister Adrian Caciu declared at the government meeting on Thursday.

“Following this revision, investment spending increases by 3.4 billion RON to 93.1 billion RON, up by 0.1 percentage points, or from 6.7% to 6.8% of GDP. The GDP share of the consolidated general budget deficit remains the same as in the initial budget, namely 5.84%, and increases in nominal terms from 76.9 billion RON to 80.1 billion RON,” Adrian Caciu said.

He then presented the list of the main credit release authorities who had their budgets supplemented, mentioning in the first place the Ministry of Labor and Social Solidarity, with an extra 5.25 billion RON, of which 7.3 billion RON for social assistance.

“Transfers from the state budget to the unemployment insurance budget increased with the amount of 418.7 billion RON,” added Caciu.

He also mentioned that the Ministry of European Investments and Projects receives an additional 2.72 billion RON for the development of projects financed from non-reimbursable external funds and for the development of projects funded from the NRRP loan component.

Also, the Health Ministry gets a supplementary 2.53 billion RON, mainly for increasing transfers to the budget of the Single National Health Insurance Fund.

The Ministry of Energy receives an additional 2.5 billion RON, mainly for compensating electricity and gas prices for the economy.

The Transport Ministry has its budget supplemented by 2 billion RON, mainly for investments from NRRP loan funds for the grant of subsidies for CFR and Metrorex and for the maintenance of the transport infrastructure.

The Ministry of Development, Public Works and Administration receives 1.28 billion RON for the implementation of the National Local Development Program, for the National Program for Constructions of Public or Social Interest, for the Youth Housing Program and for the National Investments Company.

The Ministry of Entrepreneurship and Tourism gets an extra 1.15 billion RON to cover the funding for the Agri-Food program, the Start-up Nation program, as well as commitment credits for the initiation of other programs envisaged in the second half of the year.

The Justice Ministry receives 864 million RON, mainly for the payment of judicial decisions. The Ministry of Agriculture and Rural Development has 720 million RON earmarked, mainly for diesel subsidies and for the development of the irrigation infrastructure.

The government’s Secretariat General gets 251 million RON, the Research Ministry – 203 million RON, especially for the payment of Romania’s outstanding contributions to the optional programs of the European Space Agency, the Public Prosecution Office – 200 million RON, the Ministry of Economy – 125.6 million RON, the Education Ministry – 64 million RON for increasing expenses and transfers between public administration units; also, the Sports Ministry receives an additional 33.7 million RON.


Minister of Finance: 6-month budget execution shows deficit under control, criticisms of Fiscal Council, relevant


The 6-month budget execution showed us that we can keep the deficit under control, but the criticisms of the Fiscal Council are relevant and must be taken into account, Minister of Finance Adrian Caciu told the press conference organized on Thursday, after the Government meeting in which this year’s first budget revision was approved.

“I have always considered the criticisms of the Fiscal Council relevant and they must be taken into account, because there are always risks in the execution of the general consolidated budget. The 6-month execution showed us that we can keep the deficit under control. You saw that we have 1.7 pct of GDP, the 7-month execution will appear soon and you will see that we are below 2 pct of GDP. It is imperative that the Government and all of us take into account the risks that the Fiscal Council draws attention to, including the failure to achieve revenues, but also to additional expenditures being made. The goal we assume is to maintain the deficit at 5.84 pct. The basic idea is this: we have a series of support packages, measures that are directed at the population and the economy. It is obvious that you do not go for austerity from this perspective, in the sense of no longer financing the economy and the citizens as long as you have assumed the support packages. Covering those support packages leads us to maintaining the deficit as a share in GDP, because this is a commitment with the European Commission, but obviously on the nominal side the figures are related to the nominal GDP and then you have an arithmetical increase in the deficit,” Caciu explained.

Asked if Romania could face the risk of an economic crisis, the official emphasized that the current Government is acting strategically to keep things under control, but did not deny the fact that “recession-related risks” may appear.

“The situation has been complicated ever since the current Government took over office. It was complicated before, it became more complicated especially since February when the conflict in Ukraine also appeared. I think that this Government acted every day, step by step, but in a strategic way so as to keep everything under control. There are risks, we are not in an oasis where we are safe from the risks of pressure elements, for example recessionary trends. These are anticipated step by step, because you have to look at how certain indicators, like the proxies, work, and I’ll give you an example that everybody’s looking at — industrial production on the decrease. That shows that we’re going to have a difficulty, at least in the third to the fourth quarter, and you have to take some steps to revive that area, so that the economic losses are not felt horizontally. So, there are recessionary risks,” said the Finance minister.

He also conveyed to economic analysts to “be a little more moderate in their assessments” and stop presenting “apocalyptic scenes”.

“However, I would like our economic analysts to be a little more moderate in their assessments, when presenting apocalyptic scenes, because it was not necessary to announce a stagnation in the second quarter. Yes, there are economic slowdown pressures that we are taking into account. Precisely for this reason, the most important thing is the recovery of the delays in the investment area, something that can bring us to a perimeter of balance and of keeping some situations under control, considering the multiplier factor of both public investments, but also the encouragement of private investments. Another reason why we supplemented this part of private investments with one billion RON. Our interest is for the economy to function,” said Adrian Caciu.

The Fiscal Council considers that Romania’s cash budget deficit is likely to be around 7% of GDP, compared to 5.84% of GDP in the revised budget projection, as this negative balance takes into account revenues from overtaxing of over 12.8 billion RON and total expenses with energy suppliers of approximately 7.4 billion RON.

The Fiscal Council cautions that a revenue gap of approximately 9 billion RON is likely compared to the targets assumed in the budget revision bill, representing approximately 0.66 pct of GDP. On the expenditure side, the institution identified a shortage of 6.2 billion RON, that is 0.45 pct of GDP.


 Caciu: Ministry of Energy currently has 131 million, not billion RON to settle


The Ministry of Energy currently has 131 million RON to settle of energy price compensation, and the budget allocation for this is not 2.5 billion RON, but around 5 billion of RON, because there are amounts that also go to the Ministry of Labour, said Minister of Finance Adrian Caciu, on Thursday, in the press conference organized after the Government meeting in which this year’s first budget revision was approved.

“The commitment appropriations requested by the Ministry of Energy were 2.5 billion RON. There were a number of errors in the information received from ANRE [the National Energy Regulatory Authority], but we reconciled these results. We entered a normalcy and we have this Interministerial Committee, so those who are involved should come up with accurate data and discuss concretely on the figures and not spread all kinds of opinions, differences in figures in the public space and create a certain panic in society. Just a week ago, the Minister of Energy said that he confirms none of those figures, neither 40, nor 20, nor 31 [billion RON ed.n.]. The reality is as follows: the Ministry of Energy currently has 131 million RON to settle .. It’s not billions, it’s not tens of billions. We are talking about settlements in August, related to April. We must look step by step, as is done with the budget execution, and it must be anchored in reality. Budget appropriations cannot exceed commitment appropriations. Commitment appropriations t requested by the Ministry of Energy were 2.5 billion lei, that’s why I allocated 2.5 billion lei. The allocation for energy is not only 2.5 billion RON, but around 5 billion RON, because there are also amounts allocated to the Ministry of Labour. As you know, the Ministry of Labour offsets or pays the settlements for household consumers, and the Ministry of Energy for economic ones,”, explained the Finance minister.

Recently, the Federation of Associations of Energy Utility Companies (ACUE) drew attention to the fact that the budget revision is below 25 pct of what is needed to finance the energy ceiling and exposes the ability of the entire energy sector to function at a major risk.

ACUE representatives emphasize that the amount of 2.5 billion RON foreseen for the Ministry of Energy represents only 7.7 pct of the financing requirement estimated by the ministry (31 billion RON) to cover the commitments assumed by the Government only through Emergency Ordinance (OUG) 27/2022, until the end of 2022, respectively the payment of the differences between the real price of non-household consumer bills and the capped energy price.

At the same time, the amount of 7.3 billion RON foreseen for the Ministry of Labor and Social Protection for the entire chapter of “Social Assistance” is far below the funding requirement estimated by the ACUE Federation at the request of the authorities (of 8.4 billion RON) to cover the commitments undertaken by Government by OUG 27/2022, until the end of 2022.

“The money is not for the suppliers, but for the energy consumers. The suppliers grant this support for customers in advance, from their own funds. So, directly and immediately, this decision risks generating a blockage at the level of the supply activity, but the subsequent impact will be felt at the level of the entire energy sector and, in the last instance, at the end customers,” said Daniela Daraban, the executive director of ACUE.

ACUE has 22 members, including important groups in the field of electricity and natural gas, with a total number of 24,000 employees and an annual turnover of over 5.5 billion euros. ACUE members represent 56.4 pct of the entire electricity utility market and, respectively, 89.9 pct of the total gas market.


Compiled from Agerpres

Photo: www.gov.ro

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