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Government will rectify state budget on Wednesday

The government will adopt on Wednesday the final rectified form of the state budget and socialsecurity budget for 2010. According to the draft government order obtained by AGERPRES, the Labor,health and Environment ministries will obtain more money with the budget rectification.The Ministry of Labour, Family and Social Protection will receive an additional 4.365 billion lei,representing transfers from the state budget to the social security budget for balance, financing therights of disabled persons and IOVR pensions, reparatory payments, state aid for children, familyallocations, and other social aid.

The Health Ministry will receive 2.816 billion lei representing transfers from the state budget to thesingle national fund for health care to cover the deficit. The Ministry of Environment and Forests willget 241.2 million lei, the Ministry of Economy, Trade and Business 207.1 million lei.The Ministry ofCulture and National patrimony will obtain an additional 56.9 million lei to finance the project for therestoration and rehabilitation of historic monuments and the project for the restoration andrehabilitation of cultural buildings ( the National Library, I.L.Caragiale Theatre, etc.). The Ministry ofCommunications and Information Societies will get 49.6 million lei mainly for the payment of leasingservices for Microsoft licenses, while the Romanian Academy will receive 17 million lei for projectsfinanced from foreign funds.On the other hand, the budgets of the Ministry of Education and Ministry of Administration andInterior will lose 117.76 million euro (494.6 million lei) and about 113.52 million euro (476.8 millionlei) according to the draft order quoted by Agerpres.In exchange the government will increase expensesfrom funds coming from foreign credits for the Ministry of Administration and Interior with 170million lei.Budget cuts will be made for the Defense Ministry – 66.3 million euro (278.5 million lei), the Ministryof Justice – 47.14 million euro (198 million lei), the Ministry of Regional Development and Tourism –40.14 million euro (168.6 million lei), the Ministry of Agriculture and Rural Development – 33.9million euro( 142.5 million lei), the Ministry of Transport and Infrastructure – 28.97 million euro(121.7 million lei), the Public Ministry -25.02 million euro (105.2 million lei).During talks held last week upon the first reading of the budget rectification, the governmentannounced they would increase funds to co-finance European projects of the Ministries of Agricultureand Environment and will capitalize by 46 million euro the National Fund guaranteeing credits forenterprises.According to premier Emil Boc, the budget rectification has in view 'to ensure amounts needed to co-finance European projects.''Nothing is cut from co-financing, on the contrary, theEnvironment and Agriculture we increased budgets so that the absorption of EU funds would not beaffected. We capitalized the Guaranty Fund by 46 million euro in order to guarantee pre-financing andco-financing for firms which have European projects,' premier Boc said recently.1.9 billion lei will be allocated this year for the payment of debts the state has in the field of health. 0.9billion lei will be added for the budget of the National House for Health Insurance for its payments tosuppliers.The governments will also allocate 500 million lei to pay debts that state companies havetowards various companies which in their turn have debts to the state.As for the social security budgetthe government allocates another 3.8 billion lei for the payment of pensions until the end of the year.The head of the Executive announced that the budget will be rectified for an economic drop of 1.9% in2009 and a budget deficit of 6.8% of GDP, while capital expenses will be reduced by 0.2% of GDP, inorder to finance priority fields.The GDP on which budget rectification is made is 511.581 billion lei.The budget rectification thegovernment will approve on Wednesday is calculated with an exchange rate of 4.24 lei/euro, lower thanthe one considered initially of 4.25 lei/euro.Specialists from the Ministry of Public Finance declaredfor Agerpres that a lower exchange rate considered for budget rectification will have a favorableimpact, because of savings for the public debt service.MPF representatives and those of trade unions analysed on Monday the draft budget rectification for2010, the National Association of Exporters and Importers (ANEIR) considering that the budgetrectification which the government intends to approve does not have a correct base.'It is a very prudentbudget rectification based on a very negative prognosis which is contrary to positive evolutions of thefirst part of the year, economic evolution and in particular that of exports which had a 20% increase,'the general secretary of ANEIR Mihai Ionescu declared on Monday.Representatives of the Fiscal Council (CF) announced on Monday that the process of budgetrectification does not observe the principles of transparency, stability and equity.'The principle oftransparency is not observed for instance because major revisions of income chapters (non-fiscalincomes) and expenses which are not accompanied by explication notes about the sources of revisionand hypotheses taken into consideration,' CF pointed out.In this respect the Fiscal Councilrecommends improved transparency of the budget process by the detailed substantiation of the sourcesof revising budget incomes and expenses per each chapter of the general consolidated budget.'As for the principle of stability, the government has to lead the fiscal-budget policy as to ensure itspredictability on the middle term to maintain macroeconomic stability. However, the recent VATincrease, although motivated to ensure budget balance, was not made according to the stabilityprinciple, the measure being implemented in a short period of time without a detailed impact estimate,although its effects on economy are major ones,' a CF pres release on the draft budget rectificationshows.

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