The Fiscal Council warns the government that it is very likely that the 2024 budget deficit will significantly exceed the 2023 deficit, with major risks to the budget consolidation process. The department says that they received the draft budget from the Ministry of Finance on December 9, and on Wednesday they received a new version and draw attention to the fact that they cannot conduct a thorough analysis in 24 hours.

The Fiscal Council shows that on the evening of December 9, the Ministry of Finance (MoF) sent the institution the first package of documents regarding the state budget and the budget of the state social insurance and the fiscal budget strategy for the period 2024-2026, to form a conclusion before the government meeting on December 14. In the afternoon of December 13, a new package of documents was sent to the institution, the Fiscal Council drew attention to the fact that it was impossible to get acquainted with the extended opinion, so it decided to provide a preliminary opinion.

“Main risks related to the budget consolidation process”

The Fiscal Board says it cannot take into account in its estimates hypothetical revenues based on improved collection efficiency/reduced tax evasion/digitization of tax administration.

• “Accordingly, the FC’s review of the first set of documents leads to the conclusion that it is very likely that the budget deficit in 2024 will significantly exceed the deficit in 2023, with major risks to the budget consolidation process. The budget deficit in 2023, according to the documents sent by the Ministry of Finance, is 5.9% of GDP according to the cash methodology and 6.0% of GDP according to the European/ESA2010 methodology.
• Regarding the medium-term projected fiscal and budgetary framework, the consolidation of the budget for the period 2025-2027, as provided for by the documents received on December 9, is calculated to be carried out exclusively in the expenditure part, the share of budget revenues in GDP, which indicates a downward trend in the analyzed period. This strategy raises questions about the achievement of fiscal consolidation goals.
• Obligations within the framework of the PNRR and the situation with the state budget in Romania provide, from the revenue side, the adoption of some recommendations of the World Bank, other international institutions, some internal analyzes that lead to an increase in tax revenues, and, in the expenditure part, the adoption of a new law on a single salary Measures resulting from these recommendations are not included in the forecasts for the period 2025-2027.
• The CF emphasized in its findings and analysis that macroeconomic adjustment and fiscal consolidation require a significant increase in fiscal revenues, which are at a very low level in relation to Romania’s needs and compared to EU benchmarks,” the Fiscal Council said in a statement.

The Fiscal Council draws attention to the need to “send such important documents for examination in advance”: “FF understands the great pressure under which experts from the Ministry of Finance were developing the draft budget for 2024 and the FSB, but a serious assessment cannot be made in a few days, not to mention 24 hours”.

The institution under the leadership of Daniel Dayanu also says that in the next period it will analyze a new set of received documents and issue an extended opinion.

Official budget data for 2024. Who wins and who loses

According to the Ministry of Finance’s budget forecasts for next year, Romania will have a deficit of 5% in 2024, or rather a hole in public finances of 86.6 billion lei.

The Ministry of Finance has released the draft budget for next year, together with the fiscal and budgetary strategy and the law on the limits.

The marginal amount of personnel costs of the general consolidated budget, expressed as a percentage of the gross domestic product, is 8.5% in 2024, and the maximum level of public debt according to the European Union methodology at the end of 2024 is 49.8% of the gross domestic product.

• See the bill here
• See the budget summary for 202 here4, about the main credit specialists
• READ THE DRAFT LAW ON THE BUDGET HERE

The expected growth of the economy for the next year is 3.4%, and inflation is 6%. In addition, the average monthly net salary based on the budget is 4,733 lei.

The gross domestic product is estimated at 1,733 billion lei in current prices, and the budget deficit is 5% of GDP, taking into account revenues of more than 586 billion lei and expenditures of 673 billion lei. The share of total expenditures in GDP is estimated at 38.8%, and revenues at 33.8% of GDP.

A 5% increase in salaries for state employees.

In 2024, all state employees will receive a 5% salary increase, except for teachers, who will receive a 20% salary increase in two installments – January 1 and June 1.

Also, in the budgetary sphere, the filling of vacant positions by competition is suspended, additional work will be compensated on weekends, institutions and state authorities do not reward their employees, but the amount of monetary remuneration, accordingly, the value allowance for food rights, the annual financial cost of equipment rules and the financial cost of equipment rights are kept in payment at the level provided for the month of December 2023.

Who receives more money per year (budget loans)

Ministry of Internal Affairs – 27,987,183 thousand lei – +0.62%

Ministry of Finance – 65,887,452 thousand lei – +2.1%

Ministry of Transport and Infrastructure – 30,001,915 thousand lei – +28.59%

Ministry of National Defense – 39,544,618 thousand lei – +25.9%

Ministry of Education – 6162162 thousand lei – +50.07%

Ministry of Culture – 1,483,551 thousand lei – +16.02%

Ministry of Foreign Affairs – 1,341,528 thousand lei – +3.9%

Ministry of Development – 13,208,743 thousand lei – +35.01%

Ministry of Agriculture – 25,195,956 thousand lei – +9%

Ministry of Research – 3,166,764 thousand lei – +27.35%

Ministry of Environment – 3,144,156 thousand lei – +10.77%

Ministry of Family – 363,174 thousand lei – 41.41%

Ministry of Labor – 75,941,830 thousand lei – 13.%

SRI – 3,959,208 thousand lei – +2%

STS – 1,479,642 thousand lei – +28%

Presidential Administration – 109,699 thousand lei – +0.9%

Senate – 357,765 thousand lei – +8.99%

Chamber of Deputies – 663,055 thousand lei – +6.7%

Who receives less money per year (budget loans)

Ministry of Justice – 3,036,56 thousand lei – -2.2%

Ministry of Economy – 7,017,626 thousand lei – -42.25%

Ministry of European Investments and Projects – 8,667,443 thousand lei – -38.47%

Ministry of Health – 19,405,054 thousand lei – -18.46%

Ministry of Energy – 7,017,626 thousand lei – -42.25%

SPP – 356,869 thousand lei – -29.5%

SGG – 4,738,718 thousand lei – -2.46% (Photo: Dreamstime.com)