Finance Ministry Forecasts 3.25% Budget Deficit In 2009

The draft State Budget 2009, which the Ministry of Finance has sent to unions and business associations, stipulates revenues of 75.7 billion RON (13.07% of the GDP) and expenses of 94.5 billion RON (16.32%) of the GDP, the deficit being 18.8 billion RON (some 4.7 billion EUR, considering an average exchange rate of 4 RON/EUR), equal to 3.25% of the GDP.

The consolidated budget deficit is scheduled to be 2% of the GDP, which has been estimated at 579 billion RON (144.7 billion EUR). The fiscal revenues have been outlined at 64.8 billion RON, of which 19.93 billion RON from the profit tax, the revenue tax and the capital earnings tax and 44.41 billion RON from the VAT. The corporate profit tax is supposed to generate 19.93 billion RON, while the banking profit tax will bring another 750 million RON. Individuals are expected to pay 4.69 billion RON in revenue tax.

As for expenses, the draft State Budget 2009 stipulates workforce expenses in the amount of 15.68 billion RON, goods and services worth 4.42 billion RON, interests of 5.2 billion RON, subsidies of 4.26 billion RON, transfers for the public administration of 11.79 billion RON, social security expenses of 17.86 billion RON and miscellaneous transfers of 14 billion RON. From the overall VAT collection, the State will allocate 17.60 billion RON for the local budgets, of which 2.02 billion RON for decentralized spending at county level, 12.13 billion RON for decentralized spending at village, town, city and municipality level, 551.8 million RON for county and local roads, 1.98 billion RON for balancing the local budgets of villages, towns, cities, municipalities and counties and 914.2 million RON for infrastructure development.

The State also estimated a 6.95% increase in the revenue derived from the tax on banking profit in 2009. Specifically, the estimate for 2009 is 750 million RON (187.5 million EUR), compared to 701.27 million RON in 2008 and 298.44 million RON in 2007. The State has also forecast a 55% increase in the revenue derived from corporate dividends, to 271.3 million RON from 175 million RON in 2008. The State"s fiscal revenues are scheduled to be 64.8 billion RON, of which 19.93 billion RON from the profit tax, the revenue tax and the capital earnings tax and 44.41 billion RON from the VAT. The tax on corporate profit is scheduled to generate 19.93 billion RON, while individual revenues will generate 4.69 billion RON.