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On Tuesday, the International Monetary Fund – European Commission – World Bank troika has reached an agreement with Romanian authorities on 2015 budget, according to which the deficit planned for the next year will be 1.83 percent of Gross Domestic Product, up from 1.4 percent, with the understanding of a 0.4 percent share of the budget for cofinancing EU projects.
“Practically, we will have a RON 283 billion total budget, out of which RON 225 billion are revenues and RON 13 billion is the 1.83 percent deficit. It was also accepted by our international partners an economic forecast of a growth equal to the one in 2014, meaning 2.5 percent of GDP. For cofinanced European projects there are provided – as are two overlapping fiscal years, 2007-2013 and 2014-2020 – supplementary financing of RON 19 billion from state budget and RON 9 billion for local authorities”, Ponta announced at the final negotiations with international experts.
The 1.83 percent budget deficit of GDP agreed by authorities with international financial institutions, has a particular 0.25 percentage points of GDP for co-financing EU projects and the deficit increasing was necessary given the next year’s budget does not include additional taxes, said Finance Minister Ioana Petrescu, according to economica.net.
PM Ponta also announced that an extra allocation of 0.3 percent of GDP for military expenditure is not included in next year’s budget and this can only be obtained in the European Council, as the European Commission representative in negotiations with Government had no mandate for this exemption.
Also, Ponta announced that VAT for all inclusive travel services will drop in 2015, from 24 percent to 9 percent. This measure is very appreciated by the businessmen in tourism.
“We have previously clearly stated that if, in the first semester of 2014, this tendency towards economic growth, towards budget revenues increasing and maintaining deficit target keeps up, which I believe will happen based on information from the last two years and a half, then we can examine, in the future discussions, now measures for fiscal relaxations, especially VAT cuts for food products”, Ponta added.
VAT could be reduced by 2 percentage points if in the first quarter of next year will be collected an extra RON 2 billion revenues to the budget, minister for budget, Darius Valcov announced in his turn.
The next official visit of IMF delegation will take place in January.
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