The state budget and salary increases

Romanias economic performance in the first quarter was discussed in Parliament.

Daniela Budu, 11.04.2017, 13:30

Finance Minister Viorel Stefan on Monday addressed a Chamber of Deputies plenary session, at the request of the National Liberal Party, in opposition. The Liberals wanted to see if the Social-Democratic Party can live up to the promises made in the election campaign, which included salary increases.

The Liberals say state budget revenues for the first quarter are lower than the level reported in the corresponding period of last year, and below what the 2017 budget law had predicted. The National Liberal Party even called on Minister Stefan to step down, listing as the main reasons the Governments decision to cut public investment and the low rate of tax collection. Here is Liberal MP Bogdan Hutuca:

Bogdan Hutuca: “Its been only three months since the Government took office, and the Romanian economy already finds itself against the wall, without the Government even beginning to honour its promises to society. And its not just the budget revenues that took a heavy blow. Expenses too are off the charts. As a result of poor budget policies in the first three months of the year, we now find ourselves in a terrible spot, where three categories of spending, personnel, procurement and social assistance, account for 85,31% of total expenditure.

In turn, the interim Liberal president Raluca Turcan says revenues for January and February account for half the original estimate for the first three months of the year, making it impossible for the Government to cover its spending in March.

Finance Minister Viorel Stefan has dismissed the Liberals point of view, arguing that the financial results for early 2017 are in line with the Governments economic growth target of 5,2%. Over 44,000 new jobs have been made available, and public confidence in the economy has also gone up, Viorel Stefan also says.

Viorel Stefan: “The budget estimates for the first quarter of 2017 indicate a surplus of 0.2% of GDP in the consolidated budget. At the same time, positive results have been reported in terms of revenues from income taxes and social security contributions, as a result of the spike in public sector salaries, of a good VAT and excise collection rate in March, as well as of a 4.5% cut in procurement expenses as compared to the same period last year.

Minister Viorel Stefan went on to say he is waiting for the budget execution figures for the first quarter, before estimating the impact of the unified pay scale law on the budget.

Viorel Stefan: “Regarding the budgets capacity to absorb this impact, it is too early for me to tell. Im waiting for the figures for the first quarter to come out, so I may have a clearer image of the share of salary expenses the total salary fund will manage to cover in the second half of this year, and what the next budget periods will have to absorb.

The unified pay scale law for public sector employees is due to come into force on July 1, after being debated and voted by Parliament.