Draft state budget for 2019

Draft budget for 2019 stipulates fund increases for investments, public healthcare and education

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Roxana Vasile, 01.02.2019, 13:36

Criticised by the right-wing Opposition for the unacceptable delay in coming up with a public budget law, on Thursday the Government formed by the Social Democratic Party and the Alliance of Liberals and Democrats made public the 2019 state budget bill. According to the Ministry for Public Finances, the budget relies on a Gross Domestic Product that for the first time exceeds 1,000 billion lei (roughly 212 billion euro), on a 5.5% economic growth rate, a 2.8% average annual inflation rate and an estimated budget deficit of 2.55% of GDP.

The revenues expected in 2019 are put at over 341 billion lei, accounting for 33.4% of the GDP. According to the authorities, the largest amounts are expected to come from social security contributions, VAT, excises, as well as from income taxes. In turn, public expenditure is put at over 367 billion lei, accounting for 35.9% of GDP. The biggest funds will be spent on social assistance, public sector salaries and investments.

Unemployment is supposed to drop this year from 3.31% in 2018 to 3.2%, meaning that in late 2019 the number of unemployed people in Romania will be around 287,000. Net average salaries will go up to around 656 euros, and the average number of people employed will slightly exceed 6.6 million.

The main goals of this years state budget are to support public investments, public healthcare and education. Investments will account for 4.57% of GDP and will be channelled, among other areas, into the National Programme for Local Development, the defence industry, transport infrastructure and water management. The budget earmarked for the public healthcare sector is approx. 12% higher than in 2018, and will be spent primarily on hospital equipment, particularly for the procurement of incubators, ultrasound machines, screening, MRI scanning and radiotherapy equipment.

In Education, the 47% budget increase is mostly designed to cover salary raises, but money will also be earmarked for investments and projects aimed at modernising the teaching process by means of ITC equipment.

The state budget also stipulates a 15% increase in pension benefits, starting this autumn. The defence sector receives, in its turn, 2% of the GDP, in line with the commitments undertaken as a NATO member.

As always, the draft state budget has been met with a fair share of discontent. Although larger sums have been earmarked for the local administration, mayors argue that local budgets will be severely reduced because town halls are expected to take over from the central authorities a large share of social assistance expenses. Also, the ministries for the business environment, communications and energy will be getting smaller budgets than in 2018.

(translated by: Ana-Maria Popescu)