BNS trade union urges Romanian gov't to take more responsibility in fiscal and budgetary policies

The announced reforms, e-invoice, e-VAT, have upset the economic environment in Romania, in the conditions in which the fiscal adjustment "has not occurred in the last 4 years and does not seem to occur even in 2024," claim the representatives of the National Trade Union Bloc (BNS), which requests the Romanian government "more responsibility in fiscal and budgetary policies, especially in this election year"."While on May 10, 2024, the Government of Romania maintained its deficit target of 4.9% for the year 2024, the estimates of the European Commission show that the budget deficit will reach 7% of GDP this year," the statement of the trade union organization states."The data published by the Ministry of Finance show an unprecedented worsening of economic indicators, so that the budget deficit in the period January-July 2024 reached 3.6% of GDP (63.66 billion RON). With the exception of the pandemic year 2020 (when the deficit at 6 months was 4.17% of GDP, generated by the objective cause of the closure of the economy), in the first half of the year the public finances recorded the most advanced decline in the last 10 years. Consequently, the public debt reported by the Ministry of Finance has located at a historical record," claim the representatives of the BNS.According to the data communicated by the Ministry of Finance, quoted by the BNS, investment expenses (which include capital expenses) increased in the same period by only 13.47 billion RON compared to the same period in 2023, the difference of almost 13 billion RON from the additional deficit representing the increase in the general operating expenses of the state, including the increase in the interest paid for the public debt, the payment of which reached a historical maximum recorded in the first 6 months of a fiscal year.Interest expenses thus came to represent more than a quarter of the budget deficit, namely 17.6 billion RON for the period January-July 2024 (1% of GDP).Compared to the general operating expenses of the state (339.17 billion RON in the first 6 months), the recorded budget deficit represents 18.67% of their value, also a new negative record, which means that almost a fifth of the expenses are made from borrowed amounts: out of every 5 RON spent by the state, one is borrowed, the quoted source states.At the same time, the size of the deficit in the first 6 months of 2024 (63.66 billion RON) thus came to represent more than all the receipts from VAT for this period (57.09 billion RON) and much more than the total receipts from other 3 budget chapters, respectively from profit tax, salary and income tax and from other taxes on income, profit and capital gains, all of which generate total receipts of 42.3 billion RON).Thus, the size of the budget deficit after the first semester of 2024 (3.6% of GDP) clearly indicates that the budget programming carried out for the current year was defective, under the conditions in which the budget for 2024 was built on a target of 5 % of GDP.