Romania will finally have predictable, multi-year budgets

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

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

For next year the Government has committed to cap personnelspending 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 EUprojects.

The capping by law of budget deficits and of overall andpersonnel spending in advance is part of the obligations set forthe Finance Ministry by the fiscal responsibility law approved thisspring by Parliament, at the request of the IMF and of the EuropeanCommission.

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

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