The gross domestic product growth that the 2013 budget is based on has been cut down by the Government, in less than two weeks, from 1.8% to 1.6%.
“We have revised the growth because the 1.6% level is more cautious. It’s better to revise upwards during the course of the year if the revenues are better, than downwards,” budget minister Liviu Voinea said.
The signal of forecast adjustments for Romania’s economic growth in 2013 was given last week by the World Bank, which cut its estimate by more than one percent, to 1.6%. The European Bank for Reconstruction and Development is more pessimistic, and now expects a 1.4% growth. Further adjustments are very likely to follow from the IMF and the European Commission.
Prime Minister Victor Ponta said that the main parameters–economic growth, budget deficit, spending cuts, additional revenues–have been agreed in principle with the international financial institutions.
A level of 33.6% of GDP considered for budget revenue is not too optimistic, according to Voinea, as the government relies on 0.5% of GDP in added revenues from the package of fiscal measure, as well as on boosting the minimum wage.
And the budget deficit will decline from 2.3% of GDP to 2.1% of GDP in 2013, so there is still fiscal consolidation. “0.5% of the 2013 deficit comes from the payment of drug arrears, so we have consolidation,” says the budget minister.
As far as the state budget is concerned, revenues are set to grow by 6%, while spending has been increased by 10% against last year.
Ahead of the 2013 budget, the Finance Ministry published on Monday a vast set of fiscal modifications, with the measures set to be approved by the government on Tuesday to bring almost RON2 billion to the budget.
Of concern is that the pension fund deficit will exceed EUR3 billion in 2013 after the pension hike.
The state will spend almost RON30 billion on healthcare, the cumulated budget of the National Health Insurance House and the Health Ministry, 23% more than in 2012.
39 of the 51 institutions that get money from the state budget will increase their spending this year, by an average of 25.4%. Overall the average spending increase in the state budget is 16.8%, according to ZF calculations.
The biggest spending increases in this year’s state budget will target the Ministry of European Funds (up 350%), the Health Ministry (up 134%), the Competition Council (up 69%), The National Office for the Prevention and Fight Against Money Laundering (up 66%) and the Security Service (up 42%).
(English version by Daniela Stoican)