Budget deficit, 6 pct of GDP in first 11 months

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The consolidated budget execution over the first 11 months of 2009 registered an estimated deficit of 29.7 billion lei, accounting for 6 percent of the GDP compared to a deficit of 36.5 billion lei, as stipulated annual objective, according to the revised stand¬by agreement concluded with the International Monetary Fund (IMF).

According to the data released by the Ministry of Public Finance (MFP), overall budget revenues on the period Jan. 1 – Nov. 30 stood at 143.4 billion lei, reflecting a 6 percent gap from the corresponding period a year earlier, respectively 1.5 percent of the GDP, mainly due to the profit tax revenues (minus 11.3 percent), as well as of VAT revenues (minus 18.2 percent), as well as from customs duties (minus 32.4 percent).

These reductions were in part compensated by an increase in income tax revenues, of 1.7 percent, excise duties – 13.4 percent, property taxes – 4.7 percent compared to the similar period a year earlier.
Consolidated general budget expenditure cumulated on the said period amounted at 173.1 billion lei, an advance of 2.9 percent from the similar period a year earlier, but within the approved limits, accounting for 89.3 percent of the annual provision.

Personnel spending on the first 11 months of the year saw a rise of 4.7 percent from the similar period a year earlier. Despite that, this growth is mainly the consequence of salary growths approved in the second part of 2008, from the analysis of compared data resulting a reduction compared to the previous year. Spending on goods and services saw a cut of 7.1 percent from the similar period of the previous year, following shrinking measures approved through the Emergency Ordinance No. 34/2009 and this trend is expected to continue in the last month of the year.

As well, social assistance spending advanced 20.2 percent from the same period of the previous year, following the increase in the pension point in Oct. 2008 and the guaranteed minimum social pension starting with April 2009.

At the same time, in order to reduce the effects of the economic and financial crisis on the disadvantaged social categories the Government adopted a series of protection measures of the social categories with lower incomes (up to 300 lei from April 1, 2009 and 350 lei from Oct. 1, 2009), a pensions rise by 3 percent from April 1, 2009 and 2 percent on Oct. 1, 2009 and the increase of the guaranteed minimum income by 15 percent, fully covered by the state budget.

Interest rates spending jumped by 65.8 percent compared to the same period of the previous year, following worsened conditions both at home and internationally of deficit financing. Investment expenditure, including capital spending, as transfers for development programmes, stood over Jan. 1 – Nov. 30 at 28.6 billion lei, respectively 5.8 percent of the GDP.

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