The Fiscal Council (FC) considers that the revised draft budget drawn up by Grindeanu Gov’t is built on a potential overvaluation of budget revenues and a probable underestimate of current expenses, the institution stated in a preliminary opinion.
All these are likely to tip the risks balance strongly, meaning a higher deficit than projected in the absence of corrective measures, analysts note.
Even if the draft targets a deficit below 3 percent of GDP corresponding to the corrective Stability and Growth Pact (SGP), “whatever the output gap measure is used (there are major differences between the evaluations of the National Commission for Economic Forecasting (CNP) and latest available assessments of the European Commission), the budgetary construction confirms a major slippage (and lasting until 2018) from the exigencies of the preventive SGP, taken well as in the national legislation.”
Council also warns that the projected developments of aggregate income “amounts received from the EU in the account of payments made” and its counterparty expenses are not comparable with the historical ones, while the 2017 budget of is throughput by agricultural subsidies.
FC claims that it had reservations regarding projected development of some aggregated expenses included in the budgetary construction which the analysts received it on 23 January – especially at the level of goods and services, as well as personnel which appeared as undersized in the context of preliminary analysis designed without detailing the sources of projected savings (reported to the impact of measures taken).
FC argues that the new draft budget, as revised, was sent to by Ministry of Public Finances (MFP) (along with Fiscal and Budgetary Strategy text) on the morning of January 27, 2017, which made it impossible to edit a complete opinion until the government initially announced its approval (in Gov’t meeting of 27 January).
Thus, the institution will edit the final and complete opinion over the budget draft this week and will send it to Parliament.
According to the current legislation, Government and Parliament have the obligation to analyse FC’s opinions and recommendations in developing Fiscal and Budgetary Strategy, the annual budget laws, and the development of other measures determined by applying the present law, respectively, their appropriation / approval.