IMF money wasted on wages and interests

Autor: Liviu Chiru 16.02.2010

The government managed to keep the budget deficit within the bounds agreed with the IMF, at 7.2% of the Gross Domestic Product, but that was only because of temporary cost-cutting measures taken in the fourth quarter of last year. The adjustment of the public system has been postponed for 2010.

The state spent 193 billion RON (45.5 billion euros) last year, an increase of 1.4% in RON compared with 2008, but this money failed to give a boost to the economy, given that it was primarily used to pay wages and pensions rather than investments.

On the other hand, budget revenues fell by 5.4% to 156.6 billion RON (36.8 billion euros), with the most serious decline witnessed by VAT collection, as a result of the consumer spending slump. The state collected merely 34.3 billion RON from VAT, which remains the main stream of revenue for the budget, 16% less than in 2008.

Personnel spending ended 2009 with a 2.4% increase to 46.7 billion RON, as a result of the significant wage and pension raises granted in the autumn of 2008. On the other hand, capital expenditures (investments i.e.) stood at merely 23.2 billion RON (5.4 billion euros), 13% lower in RON compared with 2008.