The first budget adjustment this year was adopted on Thursday by the Romanian government and is a positive one. According to the executive, the adjustment took into account an economic growth of 3.5%, the budget revenues for the first six months and the budget execution over this period. The main beneficiary of the adjustment is the Ministry of Finance itself. It received the largest amount, over 8 billion lei, of which 1 billion were immediately allocated for the state aid scheme intended to finance large projects. The adjustment also secured more money for the Ministry of Labor, over 5 billion lei, which it will use including for compensating energy bills.
The Ministries of Health, Transport, Development and Agriculture also got more money. The money allocated to the Health Ministry is intended, mainly, to increase the transfers granted to the budget of the National Single Social and Health Insurance Fund. The Ministry of Transport will increase the subsidies for the railway and the metro companies, the Ministry of Development, Public Works and Administration will allocate additional funds to the National Local Development Program, and the Agriculture Ministry will earmark more for diesel subsidies, the irrigation infrastructure and guarantees for the loans contracted by agricultural producers. The ministries of European Projects, Education, Sports, Research, Energy and Tourism also received more money.
On the other hand, the budgets of the Ministry of the Interior, Environment, Culture and Foreign Affairs were reduced. The Fiscal Council, an advisory body that provides independent opinions on the sustainability of fiscal and budgetary policies, drew attention to the fact that the adjustment carried out by the government risks leading to a deficit higher than 7% of the Gross Domestic Product, given that the estimated one is 5.84%. The fear would be that the executive overestimated the amount that would get into the budget and underestimated part of the spending, including for compensating energy bills. The Fiscal Council claims that of the 30 billion the Government is counting on, nine will not be collected.
Also, the Council fears that expenses were underestimated by more than six billion lei. In response, the Minister of Finance, Adrian Câciu, has stated that the government has demonstrated that it can keep the budget deficit under control. According to the head of Finance, the budget execution after seven months will show that the deficit does not exceed 2% of the GDP, so the target of 5.84% at the end of the year would be achievable. The Minister admits, however, that the warnings of the Fiscal Council are pertinent regarding the risk that the estimated revenues upon adjustment will be too low and the estimated expenses will be higher. The next budget adjustment is scheduled for November. (MI)
