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| 2011 Budget Bill submitted to Parliament 07/12/2010 |
| (2010-12-07) |
| Last updated: 2010-12-08 13:09 EET |
Two months after the official deadline for their completion, the 2011 state budget and social security budget bills have been approved by the government in Bucharest and submitted to Parliament. They are austerity budgets, devised on a projected economic growth of 1.5 percent and on a budget deficit contraction from 6.8 percent to 4.4 percent.
The inflation rate is estimated at 5.3 percent. Frugality is the watchword on our present-day economic agenda. Austerity measures include freezing pensions in the public system as well as keeping social security contributions to be paid by employers and employees in 2011 at the current level, substantially curtailing VAT funds for local budgets and cutting down allocations for infrastructure. Local officials can no longer finance works with further funding. Moreover, they have to provide the funding of ongoing projects.
According to Finance Minister Gheorghe Ialomitianu, the social security budget continues to be unsustainable, which means it will have to be reinforced from the state budget again, by means of transfers of a total of 3.2 billion euros. Nor can state-owned companies and public corporations divest themselves from limitations, as they will be forced to freeze employment next year as well lest they should exceed the number of employees set for 2010. Personnel costs are thus estimated to drop to 7.5 percent of the GDP.
The Government claims that freezing jobs is necessary in order to meet the IMF-imposed deficit goal, given that quote “overcoming the downturn is slowed down due to the limited fiscal space meant to boost the economy” unquote. Loss-making or state subsidized companies have to keep their wage structure to the level of 2010. The government expects a higher cash-in from excises, income taxes and the VAT in particular, as well as from fines, seizures and taxes on gambling gains.
The state revenue will swell as a result of the implementation of the much-contested measure to cut paid parental leave to 12 months as of January 1st 2011. In addition, pensioners with a monthly income higher than 740 lei shall pay contributions to the public health insurance system.
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