Government makes positive budget adjustment

The Romanian government has made its first budget adjustment this year to allocate more money to the labour ministry.

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Mihai Pelin, 29.07.2015, 13:15

The government in Bucharest has approved its first budget adjustment this year to redistribute the additional returns collected in the first half of the year. Most of these funds, which amount to more than 4 billion lei, the equivalent of 0.9 billion euros, will go to the labour ministry. According to the Social Democrat prime minister, Victor Ponta, this is a positive adjustment, while the fundamental constitutional rights are already covered for 2016. Victor Ponta: “We have made sure all fundamental constitutional rights are provided for: salaries, pensions, allowances, employment benefits and redundancy payments. For the last three and a half years, this has become a normality, but this wasn’t the case before 31st December 2012, when there wasn’t enough money for pensions and salaries, and even after this date. For 2016, however, there is no problem and no difficulty to ensure the fundamental rights.”

The surprise of the year’s first budget adjustment is the significant reduction in the budget of the transport ministry, which oversees major infrastructure investments, while the area of social protection, represented by the labour ministry, receives the largest amount of money to pay for child allowances, which have gone up, pensions and other benefits.

More money also went to the finance, interior, defence, education, environment and agriculture ministries and the special services, the Romanian Intelligence Service and the Foreign Intelligence Service. As expected, the opposition has criticised the government’s distribution of funds. The Liberals have accused the government of allocating money based on political considerations to the local administrations run by the Social Democrats.

The Liberal first vice-president Eugen Nicolaescu says the prime minister thus tries to secure political support within the Social Democratic Party: “It is the first time since the early 1990s when the budget adjustment is discussed by a party, in this case the Social Democratic Party, and the government then carries out what the party has decided. At first sight, this may look like a redistribution of funds, in particular to the local public administration, but in fact it’s all about Victor Ponta’s fear of the large party he is part of. Giving some more money to the party’s local big guns buys him some peace and quiet as prime minister.”

The draft ordinance on the budget adjustment also provides for the necessary funds to cover a salary increase for higher ranking officials, which will come into effect on August 1st. The Fiscal Council has approved the adjustment and says it will be possible to meet the deficit target while carrying on with the current fiscal and budget policy. This year, the government is considering a 3.3% economic growth rate, compared with the previous 2.5% taken into account when creating the 2015 budget.