There is now hardly any chance that the calculations for the budget adjustment the government has been talking about since March will end any sooner than early June, Finance Ministry sources say.
Due to the difficulty of achieving the 0.7% budget deficit, which the government itself is promoting to the IMF, the IMF representative expected to assist the Finance Ministry will now no longer come to Bucharest. This triggered a delay in the talks that were due to take place with various ministries supposed to give up on significant amounts of funding allocated in the budget devised by the former government.
In practice this means that despite budgetary parameters having changed fundamentally after the introduction of the flat tax on January 1 and the reduction of profit tax to 16%, the Tariceanu cabinet is operating according to the old budget, approved last autumn by Parliament.
In these circumstances, the Finance Ministry is finding it harder and harder to make the adjustment as time passes and credit recipients get to spend more and more money according to the old budget. Things could reach a point where the Finance Ministry will have nothing left to cut with the money being spent existing on paper but not in the treasury. This means some ministries will have very little money left after the adjustment.
Prime Minister Calin Popescu Tariceanu said last month that budgets would be cut significantly for a number of ministries as a necessary step in addressing "economic constraints".
The latest deadline announced by the government for the budget adjustment was for the end of April. The adjustment was postponed again, however, due to a lack of politically acceptable solutions for the reduction of the deficit. Despite the emergence of encouraging budget figures for the first quarter, the ministry was still was unable to proceed with the adjustment.
razvan.voican@zf.ro
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
