Gov’t approves Budget revision

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The Government on Saturday approved the second Budget revision this years to account for an aggregate Government deficit of 7.3 percent of the Gross Domestic Product (GDP), up from a previous 4.6 percent, Finance Minister Gheorghe Pogea reported on Saturday at the Government House.

The new revision is built on an 8.46-percent contraction of the economy in 2009, a GDP of RON 497.3 billion (nearly 115.651 billion euros) and an inflation rate of 4.3 percent.

Because of a disfavouring macroeconomic framework, the Government deficit project was upped to RON 35.6 billion, from an initial RON 24.3 billion.
Pogea said that Government’s 2009 receipts are projected at RON 157.2 billion, or 31.6 percent of the GDP, on total spending of RON 193.7 billion, or 38.9 percent of the GDP.

Amidst an economic contraction exceeding initial projections, Government receipts are expected to decline by RON 17.4 billion in 2009, as a result of an expected decline by nearly RON 4 billion in Value-Added Tax collection, a projected decrease by RON 4.29 billion in social security contributions, as well as a decline by RON 4.19 billion in non-fiscal earnings and European fund drawings by RON 500 million less.

Pogea also said that the Government aggregate earnings were cut down by RON 5.25 billion (1.1 percent of the GDP), while Government spending was upwardly adjusted by RON 5 billion, social security spending by RON 487 million and unemployment spending by RON 875 million.

An additional RON 900 million was added to the public investment heading in the Government spending chapter for infrastructure projects, RON 500 million of which should be spent on road infrastructure and RON 400 million on local infrastructure – county roads and schools.

The 2009 public guarantee ceiling was increased by RON 400 million euros, an amount that should be used mainly to provide matching funds for projects sponsored by European grants and returnable external loans.

Also for public investment, the Ministry of Administration and Interior (MAI) received RON 303 million for an integrated state border security system.

Pogea mentioned that as far as social security is concerned, the budget for pensions and unemployment benefits was increased and the pension budget received RON 5.5 billion in public subsidies.

In order to cut on pay arrears, RON 365 million was earmarked to the CFR Calatori, the national passenger rail carrier, to help it service its RON 330-million debt to utilities providers and other business operators.

The minister mentioned that the new Budget revision includes wage spending cuts of nearly 15.5 percent a month resulting from a mandated 10-day unpaid leave for all the public employees.

Despite these potential savings, the earmarks for many ministries were downwardly adjusted as follows: the Development Ministry – RON 347 million less; the Ministry of Education and Research 0- RON 154 million less; the Finance Ministry – RON 205 million less;

the Health Ministry – RON 113 million less; the Environment Ministry – RON 108 million less; the Ministry of Sports and Youth – RON 78 million less; the Communication Ministry – RON 43 million less, and the Tourism Ministry – RON 30 million less.

The Government’s General Secretariat lost RON 66 million of its appropriations, while the cuts in the appropriations to other main public employers total RON 151 million.

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