Moldovan government has approved amendments to the Law on State Budget for 2024, reducing its deficit by 1.67 billion (-10%) to 15 billion 104.3 million lei
In particular, according to the amendments proposed by the Finance Ministry, the revenue part of the state budget for 2024 is to be increased by 1 billion 180.1 million lei (+1.8%) - from 65 billion 830.54 million lei to 67 billion 010.6 million lei, the expenditure part - to decrease by 493.4 million lei (-0.6%) - from 82 billion 608.34 million lei to 82 billion 114.9 million lei, while the state budget deficit is to be reduced by 1 billion 673.5 million lei (-10%) - from 16 billion 777.8 million lei to 15 billion 104.3 million lei. According to Finance Ministry head Victoria Belous, the main factors that led to the changes in the state budget for 2024, in order to adjust the indicators of revenues, expenditures and deficit, are the updated forecast of macroeconomic indicators for 2024, specified by the Ministry of Economic Development and Digitalization in October, as well as the level of execution of the state budget for 9 months of the current year. Thus, against the background of economic recovery in the second half of 2024, largely determined by the recovery of domestic demand, the collection of revenues from taxes and fees of the national public budget is growing. This increase was mainly due to the increase in revenues from wages and salaries, as well as the collection of revenues from taxes and indirect payments. At the same time, based on the fact that during this period, state budget revenues grew at a faster rate than expenditures, the proposed amendment to the state budget provides for the reduction of the budget deficit. According to the Finance Ministry, the revenues from taxes and fees are proposed to increase by 915.7 million lei (+1.5%), up to 61 billion 110.6 million lei, compared to the amounts approved earlier for 2024. The main increase is in the revenues from excise duties on imported goods - by 812 million lei, due to the expected increase in excise duties on imports of vehicles and tobacco products, as a result of the increase in the number of imported vehicles (+27.4%) and in the volume of imports of tobacco products (+25.6%). Also, it is planned to increase the deductions from the personal income tax by 138.1 million lei due to the increase of the average monthly gross salary by 15.5% in nominal terms in the second quarter, as compared to the same period of the previous year. Revenues from corporate income tax will increase by 50 million lei due to the increase in income tax withheld on dividends paid during 9 months. The VAT revenues on goods produced and services rendered on the territory of Moldova will increase by 22 million lei, due to the level of fulfillment of collections for the first 9 months of the current year, as well as to the increase in the recovery of private consumption. At the same time, compared to the amounts approved earlier, the grant revenues are proposed to be reduced in the budget by 41.6 million lei (-1.7 per cent), from 2 billion 424.2 million lei to 2 billion 382.6 million lei. At the same time, the grants for budget support will be reduced by 38.5 million lei, while the grants for projects financed from external sources - by 3.1 million lei. Grant revenues for budgetary support are estimated at 1 billion 714.9 million lei, 38.5 million lei less than previously approved, due to the increase of the national currency exchange rate against the forecasted exchange rate. Grants for projects financed from external sources will amount to 667.7 million lei, taking into account the level of implementation of projects financed from external sources during the first 9 months of the current year and the entry into force of new agreements. According to the Ministry of Finance, the state budget's total expenditures are expected to decrease by 493.4 million lei (-0.6%), to 82 billion 114.9 million lei, while the current expenditures are expected to decrease by about 590.3 million lei (-0.8%), compared to the previously approved (amended) volume, and to amount to 75 billion 423.1 million lei. Capital expenditures are expected to increase by about 96.9 million lei (+1.5%), to 6 billion 594.9 million lei. As a result of the redistribution of the identified savings, the draft law envisages an increase in the allocations for: projects financed from external sources to support programs in the road sector - 622 million lei, of which through redistribution - 291.1 million lei; the program of support for small and medium-sized enterprises - 100 million lei; transfers to local budgets to cover the expenses for ensuring the provisions of the normative framework on salaries in the public sector (including the allocation of financial means approved by governmental decisions) - 486.3 million lei. The expenses on projects financed from external sources are proposed to increase by 150.7 million lei against the approved (amended) level, up to 3 billion 672.0 million lei, due to the authorities' proposals and the assessment of the potential capitalization of resources within the projects till the end of the year. The biggest increase came from the following projects: Moldova - Road Sector Program Support Project - 622 million lei; Improvement of Water Infrastructure in Central Moldova - 46.7 million lei. At the same time, expenditure cuts are proposed in the following projects: Moldova Roads III and the project Moldova Roads IV - 190 million lei; Moldova – Rural Connectivity - 92.1 million lei; Additional Financing for the Moldova COVID-19 Emergency Response Project - 44.4 million lei; Moldova Buildings Energy Efficiency Project - 43 million lei; Technical and financial assistance provided to Moldova by Romania - 29.3 million lei; Moldova Water Security and Sanitation Project (project preparation) - 27.9 million lei; Education Quality Improvement Project - 27.1 million lei. The government said that the main amendments to the law on the state budget for 2024 concern the redistribution of more resources for the development of enterprises, expansion of forest areas, as well as for the restoration of the road infrastructure. Thus, the increase in the allocations is envisaged for the support program for small and medium-sized enterprises - 100 million lei, as well as for the National Forest Extension and Rehabilitation Program - 60 million lei. An additional 622 million lei will be allocated to the program support project in the road sector. There is also an additional allocation of funds for employees of local government educational institutions - 42.4 million lei, as well as for employees of theaters, circuses and concert organizations - 21.4 million lei. “We need to ensure that more budgetary space is allocated to investments as a result of economic growth. So that we can receive additional income in the future to increase pensions, salaries, social benefits,” Prime Minister Dorin Recean said. According to the Finance Ministry, the proposed changes in the state budget's revenue and expenditure parts will have an impact on the deficit of the initially approved state budget, reducing it by 1 billion 673.5 million lei, to 15 billion 104.3 million lei (4.7 per cent of the GDP). Out of the total deficit, the basic component accounts for 12 billion 303.6 million lei (81.5 per cent), while the projects financed from external sources account for 2 billion 800.7 million lei (18.5 per cent). At the same time, it is proposed to change the structure of the deficit financing sources by revising the internal sources and the inflows of external credits, including for the projects financed from external sources. It is envisaged that the amount earmarked for financing the state budget deficit from the placement of government securities in 2024 will be reduced from 6 billion to 4.95 billion lei. // 20.11.2024 – InfoMarket
