At the IMF's request, the Finance Ministry wants to set a cap onpersonnel spending and on spending of the main budget components ofRomania's consolidated budget for 2011 and 2012, via a draft lawthat does not, however, provide for any penalties if the respectivetargets are missed.
The draft provides for 187 billion RON (around 45 billion euros)in overall spending for next year and a 23.6 billion-RON budgetdeficit, i.e. 4.4% of the Gross Domestic Product (GDP), which isset to narrow to 3% of the GDP in 2012. This year's budget deficittarget was revised last month from 5.9% to 6.8%, followingnegotiations with the IMF, which resulted in a new economicforecast - the extension of recession instead of a return togrowth.
The Finance Ministry sets the spending cut to 39 billion RON or7.3% of GDP next year, and to 7.1% of GDP in 2012, after personnelspending reached 46.8 billion RON or 9.5% of GDP in 2009. In thefirst four months of this year, personnel spending in the generalconsolidated budget amounted to 16 billion RON, i.e. 3% of GDP.
The Finance Ministry anticipates a surplus for social security,unemployment, and health insurance budgets in 2011, whileunemployment insurance will end the year with no deficit, accordingto a draft law that pre-establishes the main indicators of thebudget structure over the next two years. Moreover, for localbudgets, which were derailed in the first four months of this year,the Finance Ministry provides for a 1.78 billion-RON surplus in2011.
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