BR Analysis! Budget revision: RON 0 for highways investments, RON 115 million for second biggest cathedral in Europe

The Government gives extra RON 250 million for infrastructure investments, none for highway projects, according to the first budget revision of 2018. According to the Finance ministry, the Government will spend an extra RON 115 million on Romanian Church’s (BOR) project to build the second biggest cathedral in Europe, according to BOR’s information.

The RON 6 billion funds that the Government will use for the first fiscal revision of this year are on increases in salary, pensions and healthcare spending, while the most important cut, of RON 1.68 billion, is for investments.

The government estimates budget revenues of RON 294 billion, according to the budget revision project – RON 6 billion higher than the initial estimation of RON 288 billion. It is interesting to note that recently The National Commission for Strategy and Prognosis (CNSP) has revised downward its estimates regarding the gross domestic product (GDP) growth rate, but rose the forecast for GDP value, helping the government expand its fiscal deficit.

In its latest report, the commission estimates Romania’s GDP will grow by 5.5 percent in 2018 (compared with 6.1 percent in the previous forecast, released in April), up to RON 945 billion (EUR 203.2 billion).

At the same time, the revision plan foresees large expenditures of RON 7.1 billion and a budget deficit of RON 28 billion, representing 2.97 percent of GDP. The RON 7.1 billion amount comes from an increase of the estimated revenues by RON 6 billion, while the RON 1 billion comes from the increase of the budget deficit to RON 28 billion.

The positive impact on the budget would come mainly from social security contributions, an additional RON 6.3 billion, from non-tax revenues, which is RON 2.55 billion more than the Government anticipated through the budget at the beginning of the year, and from income tax, a total of RON 1.7 billion.

The downside would be the VAT receipts this year, with a collection deficit of RON 2.1 billion, the tax on the use of goods, with a deficit of RON 1 billion, and the capital incomes also by RON 1 billion lower than the government anticipated earlier this year.

The largest allocations

The largest allocations in the RON 6 billion budget revision will be for personnel expenses, which will be allocated RON 86.2 billion, around RON 5.1 billion more than in the initial version.

Supplements to the State Budget and social insurance were made in:

The budget of the National Health Insurance Fund of RON 557.5 million,

MFP – General Actions – RON 1,278 billion,
MFP – RON 580.7 million,
Ministry of Internal Affairs – RON 366.3 million,
the Ministry of Health – RON 333.6 million,
the Ministry of Communications – RON 206.9 million,
the Ministry of Education – RON 178.1 million,
the Ministry of Transport – RON 170.5 million,
the Ministry of European Funds – RON 119.2 million,
the General Secretariat of the Government – RON 147.8 million,
ANSVSA – RON 99.5 million,
the Ministry of Agriculture – RON 73.4 million.

The rectification of the consolidated general budget is mainly concerned with ensuring the necessary for:

salary rights – the total influence at the level of the general consolidated budget around RON 5.1 billion, and from the state budget and the social insurance budgets the amount of RON 3.8 billion, out of which RON 3.6 billion for the health system,
social assistance expenses – RON 1.8 billion, to a total value of RON 100.4 billion,
expenditures for the payment of Romania’s contribution to the EU – RON 0.8 billion
supply of the Budgetary Reserve Fund – RON 0.2 billion,
amounts deducted from VAT for balancing local budgets and the School Scheme – RON 1.13 billion.

Who’s losing money

The most important expenditure cut is scheduled for investments, where the rectification provides for total allocations of RON 37.7 billion this year, down RON 1.7 billion.

Subsidies will be lower this year than planned by RON 491 million to RON 6.72 billion.

Ministries and institution with budget cuts: