Government states it will promote in the next 3 years a cautious budgetary policy

Government will promote in the next years a cautious budgetary policy because of the financial constraints. Public expenses are the main priority at the moment, depending on the programs of economic growth and poverty reduction is said in the press-release of the Ministry of Finance. According to the Medium Term Expenses Schedule (MTES) for 2007-2009 approved recently by the Government, the expenses for the wage reform in the public sector and supporting the reform in the central public administration and in the public sector as well as developing the economic infrastructure are set as priorities. Social expenses will continue to have the highest share. Expenses for the Health area and the insurance and social support expenses will grow. The Ministry of Finance foresees a slow diminishing of economic expenses linked to finishing some programs of gasification and power supply in 2008-2009. Instead the expenses for science and innovation will increase 2.8-fold. The fiscal policy for 2007-2009 includes reducing the inferior quotas of the income tax for individual persons to 7 and respectively 10%. The superior quota will maintain at the level of 20%. Starting 2008, the structure of the taxed income will be changed and the annual personal tax reliefs will be increased gradually. In the next three years the process of redistributing the social insurance quota (29%) from employer to employee will continue. In 2009 employers will pay 23% and employees 6% for the social insurance contribution. The medical premium will be increased by 4-5% starting 2007. Starting 2008 the implementation process of a new estate tax system will be initiated. Public incomes will increase by 16% in the rural areas and in 2009 will amount to about MDL 24 billion. Fiscal accumulations will be the main income source, within which VAT has a significant share. Also the medical allowances and the social insurance contributions will significantly increase. The sock of state debt, as GDP share will considerably diminish from 30.7%, according to the evaluation in 2006, to 20% in 2009. The financial balance in 2007-2008 will have a budgetary deficit which will not exceed 0.5% of GDP and in 2009 due to the lack of resources a budget excess of 0.2% of GDP is expected. MTES presents a three-year financial analysis and evaluation document, which allows to distribute strategically the public finances, rationally using resources according to the Economic Growth and Poverty Reduction Paper and other national programs; adjusting all programs and reforms with the medium term financing possibilities; monitoring the efficiency of the given financial resources. According to the document, the tendencies that will influence social-economic development programs will be a 6% increase of VAT, reduction of inflation by 7% in 2009 and maintaining the stability of the national currency against foreign currencies. The average monthly wage on economy will increase by 12% annually amounting in 2009 to MDL 2860.