Romania will finally have predictable, multi-year budgets

At the IMF's request, the Finance Minister has set firm caps in advance that it will have to observe on personnel spending and on spending allocated for the main budget components of the consolidated budget for the next three years, as well as budget deficit targets.

The government approved the law that includes the fiscal strategy for 2011-2013, and will send it to Parliament urgently. The approval comes more than three months after the draft law on the approval of certain fiscal-budgetary indicators was posted on the website of the Finance Ministry.

For next year the Government has committed to cap personnel spending from over 8% to 7.4% of GDP, to cut the deficit to 4.4%, and to double spending allocated for the co-funding of EU projects.

The capping by law of budget deficits and of overall and personnel spending in advance is part of the obligations set for the Finance Ministry by the fiscal responsibility law approved this spring by Parliament, at the request of the IMF and of the European Commission.

In the consolidated budget, overall spending will be 192.3 billion RON in 2011. Personnel spending will amount to 40.2 billion RON, with 39 billion RON being the cap agreed with the IMF, and the difference being accounted for by contributions from the military personnel.

The spending caps are set to discipline budget execution over the coming years, with the Finance Ministry due to focus on staying within the agreed limits.