Fiscal Council says budget revenues are over-evaluated by RON 2.3bn.
The joint plenum of Chamber of Deputies and Senate started on Friday the debates on the state budget draft for 2015, passing all 56 articles in just two hours. The final vote on the bill is due on Sunday.
The amendments brought to the draft amounted to RON 572.751 million (approx. EUR 130 million) pointing as financing source to the chapter General Activities of the Ministry of Finance, the chapter being diminished accordingly.
According to the joint report of the parliamentary committees budget-finance 54 amendments have been approved, one of them referring to cuts in the General Activities of the Ministry of Finance chapter, following to the other amendments.
This chapter is to be cut by RON 1.41 million for ‘personnel expenditures’, by RON 140.55 million for ‘interests’, by RON 8 million for ‘reserve funds’; the ‘budgetary reserve fund for the government’ will be cut by RON 536,000 for title 51 ‘transfers between public administration units’, by RON 354,974 million for ‘other transfers’ and by RON 62,275 million for title 56 ‘financing programs from non-reimbursable post-accession external funds’.
“The budget (finance ministry – general activities) was cut as against last year because there are no more buffers of RON 1 billion as last year, the buffers are out and we are targeting a more accurate budgetary execution. For amendments we’ve kept reserves for the debates in parliament, it’s a practice to have reserves,” Finance Minister Darius Valcov said.
The state budget revenues were set to RON 107.613 billion, the expenditures to RON 126,732 billion, while the budgetary deficit to RON 19.119 billion, according to the EU methodology ESA (from 2.2 percent of GDP in 2013 to a target of 1.2 percent of GDP in 2015, plus 0.25 percent of GDP for the co-financing of projects supported through European funds) aiming at reaching the budgetary objective on medium term in 2015 – i.e. 1 percent of GDP.
On Thursday the budget-finances parliamentary committees have given the go-ahead for the 2015 draft state budget after three days of debates, two votes against and one abstention.
The social-democrat MPs say they will vote the 2015 budget as it is a ‘healthy’ one, while the liberal MPs announced they do not support the current draft budget because is a ‘deceitful one, unrealistic’. The UDMR (ethnic Magyars’ union) vowed to decide on their stand after the parliamentary debates.
PM Victor Ponta told the MPs, after criticism coming from the opposition, that he is not going to reply to ‘offences’ and is calling on MPs to vote for the budget so that Romania will have, soon the best budget possible. “The variant not to have a budget is the worst of all,” Ponta told the joint plenum of the two chambers of parliament.
Fiscal Council – unconvinced
The anticipated fiscal revenues for the 2015 budget are over-evaluated by RON 2.35 billion (0.33 percent of the GDP), the Fiscal Council (CF) says, being reluctant to envisage a growth of investments close to the budgetary one of RON 8.6 billion.
“Aggregate fiscal revenues look as potentially over-evaluated by some RON 2.35 billion (0.33 percent of the GDP) as the Finance Ministry considers a favourable impact of the level of inland revenues. The CF reiterates its previous opinion that the revenues by improving inland tax collecting are impossible to evaluate ex ante and that a prudent approach, according to the fiscal-budgetary responsibility law, is calling for taking them into consideration ex post,” the CF opines as regarding to the state budget. It is expecting lower revenues by RON 630 million coming from VAT, by RON 550 million from property taxes, by RON 420 million from social security contributions, by RON 300 million from the profit tax and by RON 280 million from income taxes and salaries.
As far as expenditures are concerned, CF expressed reluctance last week in a preliminary overview, as regarding the aggregate projected evolutions for expenditures for goods and services, personnel expenditures and social security expenditures, but has withdrawn them following supplementary information delivered on the last two categories.
The growth of expenditures for investments is forecast to RON 8,6 billion for financing projects from European post-accession funds (+RON 6.2 billion) as well as for domestic financing (+RON 2.3 billion). The CF representatives say it’s highly improbable that investments will reach that level. It says former budgetary performances recorded considerable deflections from the initial investment expenditures forecast, most results being lower.
Drawing the conclusion, the CF expressed serious reserves for reaching the budgetary deficit.
The consolidated state budget revenues are forecast to ROIN 226.36 billion (31.9 percent of the GDP), while the expenditures are forecast to RON 239.36 billion (33.7 percent of the GDP), leaving room for a budgetary deficit of 1.8 percent of the GDP. The budget was built on a projection of 2.5 percent economic growth, an estimated GDP of RON 709.68 billion and an annual inflation of 2.2 percent.
The CF is an independent institution set up by the law of fiscal-budgetary responsibility and includes five experienced members in the field of macro-economic and budgetary policies. The members are appointed by the parliament for nine years upon the proposals coming from the Romanian Academy, the National Bank, the Academy for Economic Studies, the Romanian Banking Institute and the Romanian Banks’ Association, each proposing one person.