Romania, debt sold? Negrescu, gloomy predictions: Deficit of about 60 billion lei, money that does not exist! Where will we get it from?

The Ministry of Finance has drawn up a memorandum warning of the risk of non-payment of salaries and pensions. The document highlights quarterly spending overruns in several budget sectors.

“There is this memorandum issued by the Minister of Finance that shows us that we have a deficit of about 30 billion, money not covered from the state budget, of which 10 billion represents the money for increasing pensions from September 1. Well, in addition to these 30 billion there is already another 30 billion deficit, after the first three months we have the biggest deficit in the last 15 years.

So, in total, there are about 60 billion lei, money that does not exist at the moment. And, in addition to this, consider that there are salary increases from June 1 for teachers, there are also expenses for the defense area – about 6 billion lei, and there are other expenses that are not covered at the moment of budget.

Where will we get money from? Probably from loans. We already borrowed 1.6 billion last week with an interest rate of over 7%, yesterday we borrowed another 1 billion at an interest rate of 6.5%, and these interest rates continue to rise,” said expert Adrian Negrescu at Romania TV.

What does the Memorandum elaborated by the Ministry of Finance say about spending in the first quarter of 2024

“From the analysis of the budget execution for the first quarter of the year at the level of the main credit authorisers, we bring to attention the following:

– At the level of the main orderers of credits from the justice system (High Court of Cassation and Justice, Constitutional Court, Ministry of Justice, Public Ministry, Superior Council of Magistracy), under the title “Personnel expenses” total payments are recorded in the amount of 1.3 billion lei, representing 30% of the budget provisions approved for this expense, mainly as a result of the payment, starting from December, of salary rights as they were increased by administrative acts during 2023. It thus results that the remaining funds to be used does not ensure full payment of salary rights until the end of the year.

– At the level of the state social insurance budget, social assistance expenses for the first quarter amount to 33.6 billion lei, respectively 25.1% of the approved budget. Given that the increased pension rights in accordance with the provisions of Law no. 360/2023 regarding the public pension system goes into payment starting from September, it is necessary to allocate additional funds for their payment. The initiator’s estimated impact for the year 2024, presented in the explanatory statement of the above-mentioned law, amounts to 10.0 billion lei;

– At the level of the first quarter, the budget execution at the level of the budget of the single national health social insurance fund is 18.4 billion lei, respectively 30% of the annual provisions. The National Health Insurance House constantly informs the Ministry of Finance about the need to allocate additional funds for the settlement of medical services and medicines, including in the context of the existence of the risk of triggering the infringement procedure against the country with the object of violating EU legislation in the field of combating delay in making payments in commercial transactions”, it is stated in the Memorandum prepared by the ministry led by Marcel Boloș.

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This article represents an opinion.