Fiscal Council warns the staff expenditures will reach a historic high, above the pre-crisis level

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The share of staff expenditures of the public sector in the GDP and in overall budget expenses is to reach historic highs in 2018, above the pre-crisis level, a development which will outline the vulnerability of the public finances in the event of a macro-economic shock, the Fiscal Council has warned in Monday.

The massive cuts in investments in the past years in order to meet the high level of rigid spending (wages and pensions) is even less opportune in an economy lacking infrastructure, which is systematically seen as a blockage to economic growth over long term, the Fiscal Council informs in its opinion regarding the draft bill to amend the consolidated state budget and in the half year report on economic situation, digi24.ro reports.

The Council says that the level of staff expenditures of RON 86.2 billion, i.e. 9.1% of the GDP, exceeds the levels set by Law 269/2017 in nominal value and as share of GDP.

It also warns that the Law on Fiscal Budgetary Responsibility (69/2010) bans the increase of staff expenses by budget rectifications.

In terms of revenues, the Fiscal Council argues that the review downwards by RON 2.1 billion for VAT collection is insufficient, given that the degree of accomplishment of the collection programme of 92.6% in six months.

The council is also reserved regarding the incomings of European funds. The half year report on budget execution reveals that the share of accomplishment is of only 54.5% (lower by RON 5.7 billion) in six months.

The Fiscal Council also warns about significant risks to exceed the deficit target and the reference level of 3% of GDP, as the target of 2.97% is maintained, after rectification, based on higher, most likely excessive, review of the nominal GDP.

The Government made public, last week, the draft bill for the first budgetary rectification in 2018.

 

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