Deemed even by the ruling party members as electoral, the 2004 budget draft teems with increased social expenses. All expenses comprised under this category, pensions included, amount to 5.7bn euros, exactly one third of all the spending scheduled in the consolidated budget.
Double pensions for the farmers, pension indexation or supplementary grants for the poor families have pushed social expenses up to 10.8% of Romania's Gross Domestic Product, estimated at 53.46bn euros for 2004.
Given the positive outlook for the European economies next year, the Government sees 5.5% growth of the Gross Domestic Product. Growth continues to rely on the outside and on investments: exports are estimated to increase 8.2% in 2004 as compared to this year, whereas the gross fixed capital formation is expected to climb 13%. Consumption is credited with 3.7% growth, below the GDP growth pace. Until inflation is pushed down to controllable levels, 6-7 percent annually, the private consumption increase is likely to be constantly outpaced by the GDP growth.
Surprisingly, although 2004 will be an electoral year, no increase in the public administration consumption is forecast - levels will remain at 2.0%, just like in the previous year. Because of electoral costs, public consumption has climbed every electoral year so far, sensibly more than during regular years. However, this may be just a reserve, in case the other parameters fail to meet the stipulated targets.
The calculations also rely on a 4.7% increase in farming output, despite last year's 3.9% drop and the 2.4% decline posted in 2003. However, these estimates do not rely on the weather, which is more difficult to forecast, but on a certainty: a 10,000bn ROL (250m euros) increase in the agriculture budget, up to 28,000bn ROL (700m euros).
The consolidated budget deficit has been set at three percent of the Gross Domestic Product, up 0.3% as compared to 2003. Not a word on the previously mentioned relaxation, up to 3.7 percent, to enable financing for infrastructure. Inflation also dictated here (through the International Monetary Fund).
Good news for the employers - contributions to the state are expected to drop. The Ministry of Public Finances has suggested a 3% cut in the social security contributions (CAS) paid by the employers, of which 2.5% for the pension insurance and 0.5% to the unemployment fund. sorin.pislaru@zf.ro
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