The payroll spending increased by more than 11% and capital expenditures dropped 23% compared with the same month of 2012.
Nine months had to pass for Prime Minister Victor Ponta to worry about the budget not collecting enough money, given that the failure to collect 6 billion lei (EUR1.3 billion) in revenue mocks the exercise in collection scheduling of the “Budget Ministry”.
The budget built by Social-Democratic Party (PSD) minister Liviu Voinea and which should have been executed by the Finance Minister Daniel Chitoiu, a member of the National Liberal Party (PNL), had the blessing of the International Monetary Fund and European Commission. However, there have not been any warnings from the creditors so far.
The nine-month figures show a 11% drop in investment spending, while personnel spending rose by 15% and the spending on goods and services went up 12%, destroying the credibility of the success story of Romania’s fiscal consolidation foreign creditors like to brag about. The budget is not executed to the best interest of the economy and taxpayers, but to fulfill the electoral agenda of the parties now in power.
Moreover, containing the budget within the quarterly limits set by the IMF has already turned into an automatism of cutting investment as the only solution to the inability to improve tax collection.
The budget minister can boast that the nine-month budget gap stayed at 1.3% of the gross domestic product (GDP) compared with 1.2% in the year-ago period, but this “achievement” means jeopardizing next year’s economic growth due to the endless delays of the major infrastructure projects.
The recent sudden decision to draw EUR700 million of a EUR1 billion loan from the World Bank negotiated by the former Finance Minister Bogdan Dragoi is another proof that the government can no longer make ends meet.
Although initially devised as an extra safety, the government rushed to draw the money even though it comes with the strings of taking concrete reform steps attached or else it may become unavailable in case of serious slippages.
(English version by Loredana Fratila-Cristescu)