“The budget revision project’s breaking of several fiscal-budgetary regulations severely undermines their credibility, especially regarding the non-observance of the budget deficit target,” the council said, in an opinion drafted on July 30, when the government approved the first revision of the 2013 budget.
The Fiscal Council noted that the Finance Ministry sent information regarding the revision just a day earlier, so that the council had not the time for a thorough analysis of the project before the government’s approval.
The government estimates revenue from the income tax will increase to 10.8% of the gross domestic product by December 2013, from 9.29% of GDP at the end of June. However, the projection seems unrealistic considering the annual salary growth rate fell to 3.7% in the first half, the Council said.
Moreover, the government’s projection of a 6.26% annual growth rate of the revenue from social security contributions also appears farfetched, it added. The revenues in the segment rose by 4.26% year-on-year in the first half of 2013.
“Considering the above mentioned, the Council estimates that the revenues from the two budgetary categories are overestimated by some 1 billion lei (EUR226 million),” the statement noted.
Romania has updated its forecast on this year’s GDP to RON625.9 billion (EUR142.27 billion), from RON623.3 billion previously at the budget revision in July, saying it expects RON2.2 billion higher revenues.
The budget deficit target was also revised up to 2.3% of GDP, from 2.1% of GDP initially.