The Parliament of Moldova adopted in the first reading amendments to the Law on the State Budget for 2024, increasing its deficit by 7.6% - to 16 billion 777.8 million lei.
According to the document, in particular, the revenue part of the state budget for 2024 is planned to be reduced by 801.46 million lei (-1.2%) - from 66 billion 632 million to 65 billion 830.54 million lei, the expenditure part is to be increased by 386.34 million lei (+0.5%) - from 82 billion 222 million to 82 billion 608.34 million lei, and the state budget deficit will increase, accordingly, by 1 billion 187.8 million lei (+7.6%) - from 15 billion 590 million to 16 billion 777.8 million lei. As noted by the Ministry of Finance, amendments to the state budget for 2024 are due to adjustments to budget indicators for revenues, expenses and budget deficits, taking into account the new forecast of macroeconomic indicators for 2024, presented by the Ministry of Economic Development and Digitalization in March, as well as the progress of execution of the state budget for 5 months of the current year. Thus, against the backdrop of a slower economic recovery than expected at the stage of preparing the budget for 2024, in the first half of this year, revenue collections from direct and indirect taxes decreased, including against the backdrop of fiscal policy measures applied from 2023. In order to maintain the level of state budget expenditures, as well as to provide for some additional expenses, amendments to the state budget provide for an increase in the budget deficit, as well as a redistribution of some funds towards higher priority expenses. Increased allocations are provided for the areas of healthcare, social insurance, education, infrastructure and agriculture. In particular, it is envisaged to increase allocations to the Road Fund, intended for the repair and maintenance of national and regional roads; for the Energy Vulnerability Reduction Fund to provide energy compensation. The amounts for payment of child benefits, the volume of allocations to the National Fund for the Development of Agriculture and Rural Areas, wages for staff in educational institutions and sports schools at the local level, etc. will also increase. As noted in the Ministry of Finance, according to the amendments, revenues from taxes and fees are proposed to be reduced by 904 million lei (-1.5%) compared to the initially approved amounts - to 60 billion 194.9 million lei. The main decrease is expected in revenues from corporate income tax - 650 million lei, as a result of the impact of the fiscal policy measure to apply a zero tax rate to the income of small and medium-sized enterprises not distributed in the form of dividends related to the profits of the financial period 2023; VAT on imported goods - by 1 billion 1200 million lei, as a result of a decrease in imports by 6.6% over 3 months of 2024, compared to the same period of the previous year. The main taxes and fees, the revenues for which are proposed to be increased in the budget, are: personal income tax - by 105 million lei due to an increase in the average monthly gross salary by 14.7% in nominal terms in the first quarter compared to the same period of the previous year; VAT on goods produced and services provided on the territory of Moldova - 185 million lei, as a result of the progress of collection in the first 5 months of this year, as well as a result of increased private consumption; excise taxes on imported goods – 503 million lei. The corresponding increase is proposed primarily due to the increase in excise tax revenues on imports of vehicles and tobacco products, as a result of an increase in the number of imported vehicles (+31.8%) and the volume of imports of tobacco products (+40%). Compared to the initially approved amounts, grant receipts are proposed to increase by 29.1 million lei, while grants for budget support will decrease by 153.5 million lei, and grants for projects financed from external sources will increase by 182.6 million lei. It is expected that payments of grants for budget support will amount to 1 billion 753.4 million lei and will decrease compared to the initially approved by 153.5 million lei due to the revision of the concessional contribution under the DPO and grants provided by the multi-donor trust fund “Growth, Sustainability and Welfare Opportunities in Moldova (M-GROW).” At the same time, new grants worth 231.1 million lei were included in the budget, received through the UN Development Program (provided by Italy and Sweden), intended to finance the Energy Vulnerability Reduction Fund. Grants for projects financed from external sources will amount to 670.8 million lei in this year’s budget after its revision. The assessment is adjusted taking into account the level of implementation of projects financed from external sources over 5 months of the current year and the entry into force of new agreements. Receipts from other income are estimated at 3 billion 207.4 million lei, with an increase of 88.2 million lei due to an increase in receipts from income from the sale of goods and services by 42.9 million lei, as a result of an increase in receipts from revenues collected by budgetary institutions; voluntary donations - in the amount of 16.8 million lei, as a result of an increase in the amount of donations received by budgetary institutions; from other income - 61.7 million lei, due to an increase in receipts from other income on projects financed from external sources. Herewith, this chapter proposes to reduce revenues from property income by 23.5 million lei, especially after revising the estimate of interest revenues on loans recredited from the state budget. It is expected that in general, current state budget expenditures in 2024 will increase by approximately 520.5 million lei (+0.7%) compared to the previously approved volume, and will amount to 76 billion 013.4 million lei. Capital expenditures will be reduced by approximately 134.2 million lei (-2%), compared to the approved volume of 6729.1 million lei. As a result of the redistribution of identified savings, the main increase in contributions provided for by the bill will fall on: Road Fund - 500 million lei; Energy Vulnerability Reduction Fund - 761.5 million lei, of which 416.1 million lei are intended for energy compensation reflected in accounts payable, including 231.1 million lei in the form of grants received through the United Nations Development Program and 345.4 million lei to provide monetary compensation, including for the start of the 2024-2025 heating season; increase in amounts for payments from the state social insurance budget of benefits for the birth of children - 200 million lei; transfers to local budgets to cover personnel costs in educational institutions and sports schools – 663.7 million lei; covering the costs associated with increasing the standard value for calculating salaries of personnel of state educational institutions operating in self-government mode, subordinate to the central public authorities - 140 million lei. Expenses related to projects financed from external sources are proposed to be reduced by 59.7 million lei (to 3 billion 551.3 million lei) compared to the approved level. Meanwhile, the largest reductions will be for the following projects: support for programs in the road sector - 229.8 million lei; “Energy Sector Program” - 168.2 million lei; water supply and sewerage projects - 105 million lei. Thus, an increase in spending is proposed within the framework of some projects: “Additional financing of the project “Emergency Response to COVID-19” - 148.4 million lei; “Higher education” – 91 million lei; projects to support certain measures in the field of agriculture (“Providing farmers with fertilizers” and “Modernization of agricultural machinery and equipment”) – 145 million lei. // 04.07.2024 — InfoMarket
