The state budget deficit of Moldova for 2024 is planned to increase by 1 billion 187.8 million lei - to 16 billion 777.8 million lei against the background of a decrease in its revenue side by 801.5 million lei and an increase in the expenditure side - by 386.3 million lei.
In particular, this is provided for by the corresponding amendments to the Law on the State Budget for this year, which was prepared by the Ministry of Finance. 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, the main factor that determined the changes to the state budget for 2024 is the adjustment of budget indicators for revenues, expenses and the budget deficit, 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 progress in 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 there has been a reduction in revenue collections from direct and indirect taxes, including against the backdrop of fiscal policy measures applied from 2023. To maintain the level of state budget expenditures in such circumstances, as well as to provide for some additional spending, the proposed amendments to the state budget provide for an increase in the budget deficit, as well as the reallocation of some funds from identified savings towards higher priority expenditures. As noted in the Ministry of Finance, according to the amendments, revenues from taxes and fees, compared to the amounts initially approved for 2024, are proposed to be reduced by 904 million lei (-1.5%) - 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 types of taxes and fees, which are proposed to be increased in the budget, are the following: 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 of the 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 as a result of increased private consumption; excise taxes on imported goods – 503 million lei. The corresponding increase is proposed primarily due to an increase in excise tax revenues on the import of vehicles and tobacco products, as a result of an increase in the number of imported vehicles (+31.8%) and an increase in the volume of imports of tobacco products (+40%). Compared to the initially approved amounts, grant receipts are proposed to increase by a total of 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. All grant revenues are recalculated at the national currency exchange rate according to the new forecast of macroeconomic indicators for 2024. 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 - by 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 from 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 deductions provided for by the bill will fall on: Road Fund - 500 million lei, intended for the repair and maintenance of republican and regional roads; 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 for the provision of energy, compensation in the form of cash payments, including for the beginning of the heating season 2024-2025; 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. Expenditures 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, in accordance with proposals presented by the authorities and as a result of an assessment of the potential capitalization of resources within the framework of projects until the end of the year. Meanwhile, the largest reductions will be for the following projects: projects to support programs in the road sector - 229.8 million lei; project “Energy Sector Program” - 168.2 million lei; water supply and sewerage projects - 105 million lei. At the same time, an increase in spending is proposed within the framework of some projects: the project “Additional financing of the project “Emergency Response to COVID-19” - 148.4 million lei; project “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.// 17.06.2024 — InfoMarket.
