Government miscalculates budget target

The massive cuts in spending for goods and services, as provided for in the budget, are not sustainable and will lead to accumulation of additional arrears. This, combined with the pressure resulted from the recent salary increases, adds up to a budget deficit standing at 1% if the GDP. What the International Monetary Fund warned about, in the preliminary conclusions of its Mission from February 2006 – that the budget passed by the Parliament would not be realistic, is what actually happened. Just three months after the start of the budget application, the Government brings up the question of doubling the budget deficit for 2006 – from 0.5% to 0.9% of the GDP, having realised that more spending with goods and services would be needed. Expenses will grow by a total 3.3 billion RON (930 million euros). The increase in expenses will just partly be due to the budget increase, with two thirds of it to be covered from the revenue increase by 2 billion RON. Therefore, revenues of the consolidated budget are now estimated at 29.6 billion euros against the 29.1 billion euros for the budget passed last year, while expenses for the consolidated budget will reach 30.5 billion euros as compared to the previous 29.1 billion euros. ZF