The state budget will be in the red next year as well

The draft state budget law drawn up by the Government and published yesterday, in transparency, on the website of the Ministry of Finance, shows us that at the end of next year the state treasury will close with a deficit of 5%, which in nominal terms means 86.6 billion lei, given that in 2024 we will have a Gross Domestic Product of 1733.8 billion lei. That deficit is caused by the fact that the cash revenues of the consolidated budget will be only 586.13 billion lei (33.81% of GDP), while expenses will amount to 672.76 billion lei (38.8% of GDP ), of which only 120.1 billion lei (6.9% of GDP) represent expenses intended for investments, below the level of personnel expenses which amount to 8.5% of GDP for the whole year 2024. Budgetary expenses were increased on certain sectors, such as the 20% salary increase for teachers which will be applied in stages over the next year, as well as the 5% increase, from January 1, 2024, of the salaries of mayors and presidents of county councils and other employees in the administration central and local public.

From the value added tax, next year the Government will allocate 25.36 billion lei in amounts broken down for local budgets, of which: 4.02 billion lei for the financing of decentralized expenses at the county level, 12.85 billion lei for the financing of decentralized expenses at the commune level , cities, municipalities, sectors and the municipality of Bucharest, 800 million lei for the financing of expenses related to county and communal roads, 6.88 billion lei for balancing local budgets and for financing expenses related to the operation of public water rescue services and first aid stations on tourist beaches and 814.1 million lei for the financing of accredited private and religious education.

The draft budget also provides that in 2024 we will have an economic growth of 3.4%, an inflation rate that will reach 6% and an average net monthly salary of 4,733 lei. The public debt ceiling, according to the European Union's methodology, for the end of 2024, is 49.8% of the gross domestic product.

Regarding the economic growth forecast for next year, according to the budget report published yesterday by the Ministry of Finance, several factors will contribute to it:

- Internal demand will constitute the main element through the investment component represented by gross fixed capital formation (+6.5%), effect of the development of important public and private investment projects, simultaneously with an increase in final consumption, slightly below that of the product gross domestic, respectively 3.3%.

- On the supply side, construction will continue to be the most dynamic sector with an increase in GVA of 7.1%, based mainly on the attraction and efficient use of European funds.

- The tertiary sector will in turn have a positive contribution to the economic advance with an increase of 3.5%.

- For the industry, a modest increase in the gross added value was foreseen, respectively of 1.2%, in the conditions of maintaining an uncertain geopolitical context.

The cited report also shows that the import of goods and services, against the background of increased domestic demand for both investment and consumption, will increase by 4.6%, at the same time as a lower advance of the export of goods and services (3.4 %). Therefore, the current account deficit of the balance of external payments will represent, in 2024, 6.9% of GDP, and the current account deficit is forecast at 23.9 billion euros, with a decreasing deficit of the goods balance up to 9.7% of GDP.

The quoted document also shows that the labor market maintains its positive trajectory, next year being estimated to increase by over 83,000 people in the number of employees and an unemployment rate of only 2.7% (the total number of unemployed is estimated at 215,000 people).

In terms of public spending, the Government will continue financing schemes to support the business environment through the IMM Invest Plus program and its subprograms, as well as the allocation of funds for projects run by local authorities within the Anghel Saligny national investment program.

According to the allocation provided for in the draft state budget law, the ministries that will receive more money than in 2023 are: the Ministry of Internal Affairs - 27.98 billion lei, the Ministry of Finance - 65.88 billion lei, the Ministry of Transport and Infrastructure - a little over 30 billion lei, Ministry of National Defense - 39.54 billion lei, Ministry of Education - 61.62 billion lei, Ministry of Culture - 1.48 billion lei, Ministry of Foreign Affairs - 1.34 billion lei, Ministry of Development - 13.2 billion lei , Ministry of Agriculture - 25.19 billion lei, Ministry of Research - 3.16 billion lei, Ministry of Environment - 3.14 billion lei, Ministry of Family - 363.17 million lei, Ministry of Labor - 75.94 billion lei.

The following institutions will also receive a larger budget: SRI - 3.95 billion lei, STS - almost 1.48 billion lei, the Presidential Administration - 109.6 million lei, the Senate of Romania - 357.76 million lei, the Chamber of Deputies - 663 million lei.

Compared to the budget received in 2023, the following ministries and institutions will have a smaller allocation next year, the budgets being as follows: Ministry of Justice - 3.03 billion lei, Ministry of Economy - 7.01 billion lei, Ministry of Investments and European Projects - 8, 66 billion lei, Ministry of Health - 19.4 billion lei, Ministry of Energy - 7.01 billion lei, SPP - 356.87 million lei, SGG - 4.73 billion lei.

The Ministry of Finance also drew up the draft law on the state social insurance budget related to the public pension system, the allocation for 2024 being 134.98 billion lei; the insurance system for work accidents and occupational diseases has planned revenues in the amount of 243.16 million lei and expenses of 161.81 million lei, while the unemployment insurance budget will have revenues of 2.31 billion lei, expenses of 2.094 billion lei, budget and commitment credits of 2.15 billion lei.

The two budget projects are to be approved these days by the Government and next week to pass the Parliament, so that the budget for next year can be applied from January 1, 2024.