Budget adjustment in the context of the COVID-19 pandemic

The Romanian Government has disbursed additional funds to the sectors affected by the coronavirus crisis

Eugen Coroianu, 16.04.2020, 14:00

The Romanian Government on
Wednesday passed an emergency decree operating an adjustment of the state and
social security budgets for 2020. The adjustment takes under advisement the
latest economic data in the context of the crisis caused by the COVID-19
pandemic. Under the new budget adjustment, additional funds will go to
healthcare, labor, public finance, law and public order and public works. The top
priority is to secure budget resources to fund the financial assistance
measures adopted by the Government in recent weeks. According to the head of
the Prime Minister’s Office, Ionel Danca, the Government has tripled the funds
of the budget scheme guaranteeing loans for working capital and investment
addressed to SMEs. Enterprises can get loans at 100% subsidized interest rates,
zero interest rate and zero administration fees until the end of the year. On
Friday, SME Invest, the biggest support program addressing Romanian SMEs in
Romania, is due to kick off. Over 40,000 SMEs will take part in the SME Invest
program. This is the only assistance scheme backed by the European Commission
at present, Finance Minister Florin Citu has said. The budget adjustment has
also provided the necessary funding required to pay technical unemployment
benefits to all categories of employees whose employment agreements are
suspended right now and for all people whose activity is based on different
types of agreements, such as self-employed persons, individual enterprises or
other types of professionals, as stipulated by the Civil Code. The healthcare
sector was allotted funding both to ensure the necessary amount of medical and
sanitary materials and equipment, needed to combat the pandemic, as well as to
pay health insurance benefits and other benefits such as medical leaves, Ionel
Danca explained. The Romanian official said the budget adjustment factored in
all the macroeconomic data submitted by the National Commission for Strategy
and Forecast. Ionel Danca:

According to data issued by
the National Commission for Strategy and Forecast, the economy will shrink by
1.9% compared to the original economic growth forecast of 4.1%, based on which
the state budget was designed. This means the GDP will shrink by as much as 6%
this year. Accordingly, budget allocations were adjusted to reflect the new
data regarding the volume of economic activity and estimate revenues for this
year, while also taking into account the Government’s top priority during this
period, which is to ensure the necessary resources to support sanitary efforts
aimed at preventing the pandemic from spreading and at the same time to limit
the negative economic and social effects of this crisis.

Ionel Danca went on to say
that the budget allotted to efforts aimed at combating the pandemic now stands
at 3% of the GDP. Previously Finance Minister Florin Citu said the Government
is working on a set of major economic recovery measures which will be made
public after the state of emergency is lifted.

(Translated by V. Palcu)