The Government approved amendments to the 2020 state budget law in connection with the economic effects of the measures imposed in the process of administering the epidemiological situation. The budget deficit after the rectification will be 15.975 billion lei, which is 7.52% of the Gross Domestic Product, IPN reports.
According to Deputy Prime Minister Sergey Pușcuța, Minister of Finance, initially the budget was formed by projecting a GDP growth of 3.8% for 2020, compared with 2019. The effects of the COVID-19 pandemic on the global, regional and national processes entailed the reassessment of the evolution of economic indicators and the recalculation of the national public budget based on a 3% decline in the GDP in 2020, which implies a reduction in revenues.
Revenues decreased by 6.338 billion lei
The state budget revenues will thus decline by 6.338 billion lei or 14.3% compared with the budget approved for 2020, and will represent 37.798 billion lei following the diminution of taxes and duties and grant inflows. The amounts that will be collected from other revenues will rise by 157.6 million lei or about 8.8% after the inclusion of 50% of the net profit made by the National Bank of Moldova in 2019 and new sources of income for the social population support fund.
The state budget expenditure will increase by 2.221 billion lei or about 1.6% compared with the approved budget. These will represent 53.773 billion lei. The proposals to modify the state budget include both rises and declines in allocations designed to identify available resources for containing the COVID-19 pandemic. Given the priority costs in the period, the spending for healthcare will be increased by 1.1 billion lei, for social protection by 1.127 billion lei, for state services of a general purpose by 1.084 billion lei.
Sources for covering budget deficit of 15.975 billion lei
For covering the budget deficit of 15.975 billion lei, the Government will use the resources identified in the negotiations with the foreign partners and the emergency loan of 4.42 billion lei provided by the IMF. There will also be used the loan of 4.16 billion lei offered by Russia and the loan of 454 million lei provided by the World Bank. There will be issued state securities to the value of 4 billion lei, by 2 billion lei more than planned initially in 2020. Revenues of 700 million lei were projected from the privatization of public assets.
The Government is negotiating macro-financial support of 624 million lei with the EU. The tranche of 208 million lei received from the IMF under the program completed this March will also go to cover the budget deficit. The executive is also discussing an emergency loan with the EU.
“We couldn’t have anticipated such a situation even under the gloomiest scenario. We are in a state of emergency. We must come up with measures to save society and the economy. The revenues decline and the expenditure grows. The GDP could decrease more and the costs will have to be monitored very strictly,” Premier Ion Chicu said in the Cabinet meeting.
This and other bills approved by the Government will be submitted today to Parliament for consideration.
