State budget for 2010 could be as unrealistic as 2009 budget, experts

The state budget for 2010, which was to be submitted starting with spring, has not been yet officially presented. “Normally, the drafting of the state budget starts in May. But this year, before discussing the budget for next year, there must be corrected the budget for this year as it is already obvious that it will not be fulfilled and no corrections have been made yet,” [Victor Parlicov], expert of IIDIS “Viitorul”, has told Info-Prim Neo. “It is absolutely evident that everything is done in a hurry. The major risk is not related to the bureaucratic procedure, which can be hastened, but to the fact that the budget for the next year might not be adjusted from structural and qualitative viewpoints. I mean the fiscal decentralization, the gradual switch from a budget based on indirect taxes to a budget based on direct taxes. As not much time remained, it is highly improbable that such reforms will be implemented this year and that they will be adequately prepared, Victor Parlicov said. The same opinion was expressed by [Adrian Lupusor], economic analysts of “Expert-Grup” Center. “The terms for formulating the state budget law are important, but namely its content remains a decisive factor that will influence the public finances for next year. The terms are limited and the major risks in such circumstances are related to the macroeconomic indicators used to plan the budget revenues and spending. The unprecedented rise in the budget deficit this year served as a lesson for the executive, which made too optimistic forecasts about the economic growth this year. Lupusor also said that the present budget must be immediately corrected, while the law on the state budget for the next year must be based on an objective forecast of the economic situation. The experts anticipate that the state budget will be presented much later as it will be the new Government that will say what the real expenditure for 2009 is. Changes to this year's budget will be made at the end of October. The state budget for next year will be submitted and approved afterward. [Valeriu Prohnitchi], the director of the Independent Analytical Center “Expert-Grup”, said that the overdue presentation of the draft budget for 2010 will have a negative impact. “The delay in presenting the draft budget for next year shows that it will be as unrealistic and overoptimistic as the budget for this year. The budget deficit will total 5 billion lei towards the end of the year. The budget for 2009 should be immediately amended, while the budget for 2010 should be realistic,” he said. Valeriu Prohnitchi also said that if the budget is drafted in a hurry, it could be based on unrealistic forecasts. The macroeconomic forecasts must be made by a larger group of specialists as the risks of erroneous forecasts are lower in such a case. “The budget revenues are planned on the basis of forecasts as regards consumption, industry, agriculture and if they are erroneous the revenues will also be incorrect,” the expert said.