Government green lights state budget for 2023

The state budget and social security budget have these days been under debate in Bucharest’s Parliament, after being adopted by the Government. The state budget was built on an estimated economic growth rate of 2.8% and a 14% increase in revenues, which in turn depend on a bigger GDP. The budget deficit is expected to go up by almost 4.4%. The novelty is a bigger budget for defence, set at 2.5% of the DGP. The state budget also allows for a 12.5% increase in pensions, a minimum wage of 3,000 lei (approx. 610 euros) and financial aid for people with pensions of up to 3,000 lei.

Finance Minister Adrian Câciu has explained budget allocations:  “Institutions that will receive more than in 2022 are the Agriculture Ministry, 25.2 billion lei (5.1 billion euros), the Home Affairs Ministry 25.5 billion lei, the Ministry of Entrepreneurship and Tourism 4 billion lei (0.8 billion euros), the Defense Ministry 35.2 billion lei (7.1 billion euros), the Research Ministry 3.2 billion lei (0.65 billion euros), the Culture Ministry 1.2 billion lei (0.2 billion euros) and the Development Ministry 13.6 billion lei (2.7 billion euros), also given the implementation of national programmes financed by the state. The Family Ministry will receive 620,7 million lei (126 million euros) while the Education Ministry will get 37 billion lei (7.5 billion euros).  The ministries which will have smaller budgets are the Energy Ministry with 3 billion lei (0.6 billion euros) and the Labour Ministry which has its budget decreased by 4%. The Justice Ministry will also have a smaller budget, by 51% less than before, so a budget of only 2.9 billion lei (0.59 billion euros). This is due to the implementation of a new law on the salary of magistrates, stipulating that they are no longer paid by the Public Ministry but by the High Court of Cassation and Justice.

The Fiscal Council, which only has a consultative role, warns over the excessive optimism in drafting the state budget. In short, the Government is counting on revenues of more than 11 billion lei, when it is in fact able to collect by almost 2.5 billion lei  (0.5 billion euros) less. Also, the Government estimates a budget deficit of 4.4% of the GDP, while the Fiscal Council sees it at around 5.7%. The Fiscal Council also says the Government seems to have forgotten to take into account expenditure with the co-financing of European projects, the investment in the defence sector and the loans under the National Recovery and Resilience Plan. The County Councils’ Union has signalled the same problem, saying the Government does not allocate enough funds to co-finance non-repayable European projects and local investment projects, which risk being blocked. (EE)