The Romanian government projects a public deficit of 2.55 percent of the gross domestic product (GDP) this year, according to the Finance minister Eugen Teodorovici. In the same time, the mayors from Romania accuse the government of slashing their investment funds by 30 percent this year.
The government expects a GDP growth rate of 5.5 percent this year, much higher than most estimates of independent analysts.
The Finance minister claims that the government will increase budgets for health and education, while the Defence budget will be maintained at 2 percent of GDP.
But the first discussions regarding the public budget for 2019 showed that local authorities in Romania risk losing money compared with 2018.
“This proposal affects our budget by EUR 12 million. Last year’s budget was EUR 120 million. Basically, we lose about 30 percent of the investment budget, “Gheorghe Falca, the mayor of Romanian western city of Arad, said on Tuesday.
In the same time, the government wants to increase the budget of county councils up to 30-35 percent of local income tax, from 18 percent last year, giving more powers to so-called “local barons” in Romania, most of them members of PSD, the main ruling party.
New taxes but no budget
Running out of revenue sources, the government has recently introduced a tax on bank assets of 0.3 percent from January 1st, 2019, and capped the retail and corporate gas price at RON 68/Mwh.
The government also imposed special taxes of 2 percent of turnover on energy firms and 3 percent on telecom companies.
The Ministry of Finance has not yet released a budget project for 2019 and many experts say it has no money to finance its soaring spending on public servants’ wages and pensions.