The Government could compromise Moldova before the donor community, experts say

The Government has not only inadequate skills in budget-planning at local and central level, but also low absorption capacities of funds, which could compromise Moldova before the donor community, stated Ana Popa, department head at the Independent Analytical Centre “Expert-Grup”, as part of a roundtable meeting themed “Developments and trends in the Moldovan economy in 2007”. Ana Popa said that 2007 saw a situation similar to the previous years, where the collected tax revenues beat forecasts, while the public expenses are lower than projected and increase towards the end of the year. According to the expert, indirect taxes continue to account for the most part of revenues to the State Budget, which, on one hand, is a sign of stability, and on the other leaves room for the Government to implement certain reforms that would spur the economy. Speaking about Moldova’s efforts to liberalise the economy, Ana Popa said that they had no effects on the 2007 State Budget, however they will certainly come this year. A zero-rate tax on reinvested corporate income will very much affect the local budgets, which depend on such incomes in a proportion of some 30 percent. That is why in 2008 government subsidies to local budgets have risen by nearly 55 percent, which diminishes the financial autonomy of the local authorities. In addition, Popa said that the so-called fiscal amnesty is not a good move either, because it could discourage the honest taxpayers. As for capital legalisation, its financial results have been very insignificant for the State Budget. In 2007, overall incomes to the State Budget climbed to about 14 billion lei, which was 100.4% of the forecasted amount. State Budget expenditure topped 14.2 billion lei, which was 98.5% of the planned amount. Initially, the 2007 State Budget Law provided for incomes of 12.08 billion lei and expenses of 12.16 billion lei. Throughout the year, the budget law was revised thrice.