Investment sacrificing saves budgetary gap target again

The Finance Ministry has tightly managed to fall in line with the budgetary deficit target negotiated with the IMF for the first half of the year, of 18.2bn RON, but the result was achieved, in line with the already customary practice of sacrificing investments and delaying payments to the private environment, including VAT reimbursements. Even so, total expenditures rose by 4%, while receipts were 0.1% lower. Sums earmarked for investments were 22% smaller than in the first half of 2009, while goods and services expenses were cut by just 1.7%, and personnel ones dropped by 4.5%. Instead, subsidies increased by 6.3%, and social expenses by more than 12%. While in April and May the decline pace of capital expenditures slowed toward 10%, at the end of the first half the drop reached 22.4% against the same period of last year. Investment expenses, including capital expenses and transfers for development programmes, reached 11.7bn RON, accounting for just 12.2% in total budgetary expenditures. “Data referring to budgetary execution reveal deepening imbalances at the level of the general budget, as capital expenses continued to shrink, while social assistance expenses and subsidies maintained their upward trend. In early 2010, the government pledged to cut expenses, but after the first six months of the year we’re still witnessing an increase of current expenses by 6.4%, so that this intention is just a declarative one, without materialising in statistical data, which do not include the level of arrears, anyway,” commented Melania Hăncilă, chief-economist of Volksbank.