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How 2019 began: Investments, allocations by 78.5% lower than the same period of 2018. 21% decrease in co-financing for attracting European funds
de Alexandra Pele , 8.4.2019
The consolidated general budget recorded a deficit of 0.5% of GDP in the first two months of 2019 namely RON 5.2 billion, a “performance” only possible as a result of the massive reduction in the amounts allocated to public investments, according to data the Ministry of Public Finance (MFP) published on Monday, with a five-day delay.
Public investments, namely capital expenditures, amounted to RON 722.6 million, by 78.3% less than in the first two months of last year, when they amounted to RON 3.3 billion.
In the first two months of 2019, the public administration functioned without an approved draft budget, so only current payments have been made to allow the public apparatus to function. If Romania had started 2019 with a budget published in the Official Gazette, and in the first two months the Government had made investment expenditures at least at the same level as in the same period of last year, the budget deficit would have been 0.7 % of GDP.
In terms of projects funded by European funds, in the first two months, the state spent the same amount as it received. In other words, bills worth RON 2.3 billion lei were settled from Brussels (25.7% less than in the first two months of 2018), while in terms of expenditure, the state co-financed with RON 2.5 billion (21.9% less than in 2018).
Public investment is often used as a “buffer” of the general consolidated public budget, and payments for projects funded from the public budget are often postponed to the last months of the year so as to ensure compliance with the 3% of GDP deficit target.
In the last three of 2018, for instance, capital expenditures of about RON 8.5 billion have been made, more than in the first seven months of the year.
Last year, capital expenditures amounted to RON 23.8 billion, equivalent to 2.5% of GDP, which represents a slight increase compared to 2017, when the negative record has been reached at this chapter, with investments financed exclusively from public funds representing the equivalent of 2.3% of GDP.
By adding projects funded from European funds, the total value of investments in 2018 was about RON 48.7 billion, equivalent to 5.1% of GDP, compared to RON 38.2 billion in 2017, equivalent to 4.5 % of GDP.
Major infrastructure projects suffer the most, projects which can be financed from European non-reimbursable funds and, although they enjoy significant allocations at the beginning of the year, close the year with equally significant failures.
In the period 2016-2018, since the money for the 2014-2020 European financial year was released, the budget implementation for the infrastructure was by more than RON 6.8 billion lei below the amounts allocated in the budget laws for each year, according to an analysis by cursdeguvernare.ro.
In the period 2015-2017, another RON 5.2 billion has been cut from the post-accession funds related to the previous financial year.
In none of the four years under review, the budget implementation in the field of transport investments did not meet the level budgeted.