The Government intends to spend the same amount in RON as in2010, but this entails a harsh adjustment in real terms, by 2.2% ofGDP, which did not occur in 2009 and 2010.
Romania needs to adjust its budget deficit to 4.4% of GDP nextyear, from the 6.8% of GDP forecast for this year, with thegovernment deciding to make this adjustment by means of significantspending cuts.
Plans are very ambitious as far as spending adjustments areconcerned - spending is set to be cut by around 2.2%, from 39.1% ofGDP to 36.9% of GDP, while the share of revenues to GDP will onlyclimb from 32.3% to 32.5% of GDP, i.e. by 0.2 %.
The authorities will therefore seek to do next year what they couldnot do in 2009 or this year, when the share of revenues to GDP wasonly marginally down. In 2009 the share of spending to GDP was39.4% compared with 37% of GDP in 2008.
2011 spending is estimated to stand at 200 billion RON, equal innominal terms to the 2010 estimate made after the budget revision,whereas the original budget provided for an overall spending of 208billion RON, i.e. 8 billion RON (2 billion euros) more.
The share in the GDP is down because the GDP is set to grow to 543billion RON, from the 512 billion RON estimated for 2010.
The decline is set to come from personnel spending (-1.6 billionRON, to 40.6 billion RON), from goods and services (-1.6 billionRON, to 27.3 billion RON) and from subsidies (-0.6 billion RON, to5.8 billion RON).
As far as revenues are concerned, the authorities seem to venturean optimistic draft budget, as in previous years. Whilst statebudget revenues are estimated to rise by around 15%, consolidatedbudget revenues are expected to increase by nearly 7% in 2011,risking to overestimate the tax collection ability.
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