{"id":447746,"date":"2019-11-30T11:49:30","date_gmt":"2019-11-30T11:49:30","guid":{"rendered":"http:\/\/www.moldova.org\/en\/?p=447746"},"modified":"2019-11-30T14:39:54","modified_gmt":"2019-11-30T14:39:54","slug":"the-state-budget-of-moldova-for-the-next-year-includes-a-deficit-of-7-billion-lei-why-this-could-be-a-problem","status":"publish","type":"post","link":"https:\/\/www.moldova.org\/en\/the-state-budget-of-moldova-for-the-next-year-includes-a-deficit-of-7-billion-lei-why-this-could-be-a-problem\/","title":{"rendered":"The state budget for the next year includes a deficit of 7 billion lei. Why this could be a problem?"},"content":{"rendered":"<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\"> 3<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span><p>On November 27th, the Government of the Republic of Moldova approved the draft budget for the next year. The document displays revenues of over <strong>44 billion<\/strong> <strong>lei<\/strong> and expenditures of<strong> 51 billion<\/strong> <strong>lei<\/strong>. Thus, a budget deficit of<strong> 7.4 billion<\/strong> <strong>lei<\/strong> was calculated, whereas a lower amount- 6.1 billion lei &#8211; was previously <a href=\"https:\/\/www.privesc.eu\/Arhiva\/89312\/Sedinta-Comisiei-nationale-pentru-consultari-si-negocieri-colective-din-25-noiembrie-2019\">presented<\/a> at the meeting of the National Commission for Collective Consultations and Negotiations on November 25th.<\/p>\n<h4>Assurances vs doubts<\/h4>\n<p><em>&#8220;The budget deficit difference of 1.3 billion lei is the equivalent of an eventual investment loan for the development of road infrastructure,&#8221;<\/em> explained Minister of Finance Sergei Pu\u0219cu\u021ba. The minister explained that the deficit will be financed by loans on the internal market, issuance of securities \u200b\u200band privatisation of public assets, yet he didn&#8217;t provide too many details about it. &#8220;<em>The real budget deficit is 2.6 billion lei only,&#8221; <\/em>added Pu\u0219cu\u021ba.<\/p>\n<p>The internal state debt is expected to not exceed 25.7 billion lei, and the external state debt is forecasted to be 41.8 billion lei at the end of the next year, according to the projections made by the Ministry of Finance.<\/p>\n<p>On the other hand, former Minister of Finance Natalia Gavrili\u021b\u0103 criticised the decision of the current Government, saying that it is taking irresponsible actions.\u00a0<em>&#8220;The Government increased overnight the state budget deficit to 7.4 billion lei, or <strong>3.25% of GDP<\/strong>. The draft budget was approved without the Government publishing the annexes or the informative notes to the budget. The Minister of Finance avoided to specify how this deficit will be financed. These decisions, which will affect our country in the coming years, are taken with maximum irresponsibility,&#8221;<\/em> the former Minister of Finance said.<\/p>\n<h4>The main public expenditures<\/h4>\n<p>The main focus of the future public expenditures are\u00a0investments in infrastructure, creating jobs and increasing people&#8217;s well-being, according to an official <a href=\"https:\/\/gov.md\/ro\/content\/guvernul-aprobat-mai-multe-proiecte-sociale-dar-si-proiectele-legilor-bugetare-anuale-pentru\">statement<\/a> made on the Government official page. That is why, a series of <strong>social projects<\/strong> and expenditures were approved, such as granting an unique support for people that receive a low level of pensions and allowances, increasing the cold weather allowance, pension indexation for former military corps, etc.\u00a0\u00a0<em>&#8220;We are a Government that is focused on people. That is why we came up with these projects. There is financial coverage for these projects,&#8221;<\/em> said Prime Minister Ion Chicu.\u00a0The coverage, as the head of Government mentioned, will be provided from the estimated difference in social security revenues, which are expected to be 2 billion lei higher than the revenues in 2019.<\/p>\n<h4>Money from abroad<\/h4>\n<p>Next year, the Government expects to receive more than <strong>8 billion lei\u00a0<\/strong>from abroad, according to the <a href=\"http:\/\/tv8.md\/2019\/11\/28\/doc-cum-va-aduna-bani-guvernul-chicu-pentru-acoperirea-bugetului-de-stat-pentru-2020-cat-vor-insuma-granturile-si-creditele-obtinute-de-la-partenerii-externi\/\">annex<\/a> to the state budget, prepared by the Ministry of Finance, out of which\u00a0109.7 million lei in the form of grants received from other states&#8217; Governments, 1.6 billion from donations received from international organisations and\u00a06.3 billion lei from foreign received loans.<\/p>\n<p>At the same time, the US Ambassador to the Republic of Moldova, Dereck J. Hogan, <a href=\"https:\/\/www.youtube.com\/watch?v=3vl_H8GbQUc\">emphasised<\/a> that external partners want to see a Government implementing reforms, otherwise the country will be lacking financial support. <em>&#8220;The PSRM-ACUM coalition had more potential to implement the necessary reforms. Now we expect this to be done by the current Government. [&#8230;] We want the current Government to continue implementing reforms in the same way. External partners insist on continuing to implement reforms. If external partners, including the US, will not see progress, of course we will stop funding,&#8221;\u00a0<\/em>the ambassador said.<\/p>\n<p><em>&#8220;Moldova has now a new government, and the need for genuine reforms remains,&#8221;<\/em> <a href=\"https:\/\/eeas.europa.eu\/headquarters\/headquarters-homepage\/71131\/speech-federica-mogherini-european-parliament-plenary-debate-eastern-neighbourhood_en\">stated\u00a0<\/a>Federica Mogherini during a speech at the European Parliament Plenary debate on eastern neighbourhood developments. So the external source of financing for Moldova remains conditioned and, therefore, is not certain.<\/p>\n<h4>World Bank projections<\/h4>\n<p>According to the World Bank economic <a href=\"http:\/\/pubdocs.worldbank.org\/en\/298561557681989788\/Moldova-Economic-Update-Spring-2019-final-EN.pdf\">projections<\/a> for the Republic of Moldova, the budget revenues was going to reach 29.5% of GDP (66.25 billion lei), while the budget expenditures was going to represent 31.6% of GDP (70.97 billion lei) in 2020. Consequently, a lower budget deficit was expected &#8211; 4.72 billion lei. The public external debt was forecasted to raise to 146.43 billion lei, as compared to its actual value of 122.74 billion in 2018. Thus, it is not clear yet how the Ministry of Finance calculated the value of\u00a041.8 billion lei for the state external debt\u00a0 and whether the values included in the state budget, as well as the Government promises to cover the budget deficit reflect the reality.<\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"size-full wp-image-447749 aligncenter\" src=\"http:\/\/www.moldova.org\/en\/wp-content\/uploads\/sites\/2\/2019\/11\/forecasts-WB-Moldova.jpg\" alt=\"\" width=\"930\" height=\"494\" srcset=\"https:\/\/www.moldova.org\/en\/wp-content\/uploads\/sites\/2\/2019\/11\/forecasts-WB-Moldova.jpg 930w, https:\/\/www.moldova.org\/en\/wp-content\/uploads\/sites\/2\/2019\/11\/forecasts-WB-Moldova-300x159.jpg 300w, https:\/\/www.moldova.org\/en\/wp-content\/uploads\/sites\/2\/2019\/11\/forecasts-WB-Moldova-768x408.jpg 768w, https:\/\/www.moldova.org\/en\/wp-content\/uploads\/sites\/2\/2019\/11\/forecasts-WB-Moldova-400x212.jpg 400w\" sizes=\"(max-width: 930px) 100vw, 930px\" \/><\/p>\n<p>Next, there draft budget law will be examined in up to 3 readings in the Parliament, based on an explanatory statement of the Government and the reports&#8217; presentation by specialised committees.\u00a0 If it&#8217;s the case, the necessary changes will be made and the state budget law will be adopted.<\/p>\n","protected":false},"excerpt":{"rendered":"<p><span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\"> 3<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span>On November 27th, the Government of the Republic of Moldova approved the draft budget for the next year. The document displays revenues of over 44 billion lei and expenditures of 51 billion lei. Thus, a budget deficit of 7.4 billion lei was calculated, whereas a lower amount- 6.1 billion lei &#8211; was previously presented at [&hellip;]<\/p>\n","protected":false},"author":31,"featured_media":447750,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,56],"tags":[474,477,35,27,475,476],"class_list":["post-447746","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-reportaje","tag-budget","tag-expenditures","tag-important","tag-moldova","tag-projections","tag-revenues"],"content_social_share":"<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\"> 3<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span><p>On November 27th, the Government of the Republic of Moldova approved the draft budget for the next year. The document displays revenues of over <strong>44 billion<\/strong> <strong>lei<\/strong> and expenditures of<strong> 51 billion<\/strong> <strong>lei<\/strong>. Thus, a budget deficit of<strong> 7.4 billion<\/strong> <strong>lei<\/strong> was calculated, whereas a lower amount- 6.1 billion lei &#8211; was previously <a href=\"https:\/\/www.privesc.eu\/Arhiva\/89312\/Sedinta-Comisiei-nationale-pentru-consultari-si-negocieri-colective-din-25-noiembrie-2019\">presented<\/a> at the meeting of the National Commission for Collective Consultations and Negotiations on November 25th.<\/p>\n<h4>Assurances vs doubts<\/h4>\n<p><em>&#8220;The budget deficit difference of 1.3 billion lei is the equivalent of an eventual investment loan for the development of road infrastructure,&#8221;<\/em> explained Minister of Finance Sergei Pu\u0219cu\u021ba. The minister explained that the deficit will be financed by loans on the internal market, issuance of securities \u200b\u200band privatisation of public assets, yet he didn&#8217;t provide too many details about it. &#8220;<em>The real budget deficit is 2.6 billion lei only,&#8221; <\/em>added Pu\u0219cu\u021ba.<\/p>\n<p>The internal state debt is expected to not exceed 25.7 billion lei, and the external state debt is forecasted to be 41.8 billion lei at the end of the next year, according to the projections made by the Ministry of Finance.<\/p>\n<p>On the other hand, former Minister of Finance Natalia Gavrili\u021b\u0103 criticised the decision of the current Government, saying that it is taking irresponsible actions.\u00a0<em>&#8220;The Government increased overnight the state budget deficit to 7.4 billion lei, or <strong>3.25% of GDP<\/strong>. The draft budget was approved without the Government publishing the annexes or the informative notes to the budget. The Minister of Finance avoided to specify how this deficit will be financed. These decisions, which will affect our country in the coming years, are taken with maximum irresponsibility,&#8221;<\/em> the former Minister of Finance said.<\/p>\n<h4>The main public expenditures<\/h4>\n<p>The main focus of the future public expenditures are\u00a0investments in infrastructure, creating jobs and increasing people&#8217;s well-being, according to an official <a href=\"https:\/\/gov.md\/ro\/content\/guvernul-aprobat-mai-multe-proiecte-sociale-dar-si-proiectele-legilor-bugetare-anuale-pentru\">statement<\/a> made on the Government official page. That is why, a series of <strong>social projects<\/strong> and expenditures were approved, such as granting an unique support for people that receive a low level of pensions and allowances, increasing the cold weather allowance, pension indexation for former military corps, etc.\u00a0\u00a0<em>&#8220;We are a Government that is focused on people. That is why we came up with these projects. There is financial coverage for these projects,&#8221;<\/em> said Prime Minister Ion Chicu.\u00a0The coverage, as the head of Government mentioned, will be provided from the estimated difference in social security revenues, which are expected to be 2 billion lei higher than the revenues in 2019.<\/p>\n<h4>Money from abroad<\/h4>\n<p>Next year, the Government expects to receive more than <strong>8 billion lei\u00a0<\/strong>from abroad, according to the <a href=\"http:\/\/tv8.md\/2019\/11\/28\/doc-cum-va-aduna-bani-guvernul-chicu-pentru-acoperirea-bugetului-de-stat-pentru-2020-cat-vor-insuma-granturile-si-creditele-obtinute-de-la-partenerii-externi\/\">annex<\/a> to the state budget, prepared by the Ministry of Finance, out of which\u00a0109.7 million lei in the form of grants received from other states&#8217; Governments, 1.6 billion from donations received from international organisations and\u00a06.3 billion lei from foreign received loans.<\/p>\n<p>At the same time, the US Ambassador to the Republic of Moldova, Dereck J. Hogan, <a href=\"https:\/\/www.youtube.com\/watch?v=3vl_H8GbQUc\">emphasised<\/a> that external partners want to see a Government implementing reforms, otherwise the country will be lacking financial support. <em>&#8220;The PSRM-ACUM coalition had more potential to implement the necessary reforms. Now we expect this to be done by the current Government. [&#8230;] We want the current Government to continue implementing reforms in the same way. External partners insist on continuing to implement reforms. If external partners, including the US, will not see progress, of course we will stop funding,&#8221;\u00a0<\/em>the ambassador said.<\/p>\n<p><em>&#8220;Moldova has now a new government, and the need for genuine reforms remains,&#8221;<\/em> <a href=\"https:\/\/eeas.europa.eu\/headquarters\/headquarters-homepage\/71131\/speech-federica-mogherini-european-parliament-plenary-debate-eastern-neighbourhood_en\">stated\u00a0<\/a>Federica Mogherini during a speech at the European Parliament Plenary debate on eastern neighbourhood developments. So the external source of financing for Moldova remains conditioned and, therefore, is not certain.<\/p>\n<h4>World Bank projections<\/h4>\n<p>According to the World Bank economic <a href=\"http:\/\/pubdocs.worldbank.org\/en\/298561557681989788\/Moldova-Economic-Update-Spring-2019-final-EN.pdf\">projections<\/a> for the Republic of Moldova, the budget revenues was going to reach 29.5% of GDP (66.25 billion lei), while the budget expenditures was going to represent 31.6% of GDP (70.97 billion lei) in 2020. Consequently, a lower budget deficit was expected &#8211; 4.72 billion lei. The public external debt was forecasted to raise to 146.43 billion lei, as compared to its actual value of 122.74 billion in 2018. Thus, it is not clear yet how the Ministry of Finance calculated the value of\u00a041.8 billion lei for the state external debt\u00a0 and whether the values included in the state budget, as well as the Government promises to cover the budget deficit reflect the reality.<\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"size-full wp-image-447749 aligncenter\" src=\"http:\/\/www.moldova.org\/en\/wp-content\/uploads\/sites\/2\/2019\/11\/forecasts-WB-Moldova.jpg\" alt=\"\" width=\"930\" height=\"494\" srcset=\"https:\/\/www.moldova.org\/en\/wp-content\/uploads\/sites\/2\/2019\/11\/forecasts-WB-Moldova.jpg 930w, https:\/\/www.moldova.org\/en\/wp-content\/uploads\/sites\/2\/2019\/11\/forecasts-WB-Moldova-300x159.jpg 300w, https:\/\/www.moldova.org\/en\/wp-content\/uploads\/sites\/2\/2019\/11\/forecasts-WB-Moldova-768x408.jpg 768w, https:\/\/www.moldova.org\/en\/wp-content\/uploads\/sites\/2\/2019\/11\/forecasts-WB-Moldova-400x212.jpg 400w\" sizes=\"(max-width: 930px) 100vw, 930px\" \/><\/p>\n<p>Next, there draft budget law will be examined in up to 3 readings in the Parliament, based on an explanatory statement of the Government and the reports&#8217; presentation by specialised committees.\u00a0 If it&#8217;s the case, the necessary changes will be made and the state budget law will be adopted.<\/p>\n<div class='heateorSssClear'><\/div><div  class='heateor_sss_sharing_container heateor_sss_horizontal_sharing' data-heateor-sss-href='https:\/\/www.moldova.org\/en\/the-state-budget-of-moldova-for-the-next-year-includes-a-deficit-of-7-billion-lei-why-this-could-be-a-problem\/' data-heateor-sss-no-counts=\"1\"><div class='heateor_sss_sharing_title' style=\"font-weight:bold\" ><\/div><div class=\"heateor_sss_sharing_ul\"><a aria-label=\"Facebook\" class=\"heateor_sss_facebook\" 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