Expert-Grup

Although budget disaster will be avoided in 2015, risks are higher for 2016 (study)

Monday, 16 November 20154138 views
Although budget disaster will be avoided in 2015, risks are higher for 2016 (study)

Automatically translated summary. The full article is available in Romanian.

A study by the Independent Think Tank “Expert-Grup”, authored by Iurie Morcotîlo and funded by the Soros Foundation Moldova, finds that Moldova's public finances will avoid a critical situation at the end of 2015, despite an unfavourable economic context, but that risks for the 2016 budget are greater.

Revenues to the National Public Budget met 98.5% of the plan for the first nine months, 0.4 percentage points less than in 2014 but well above 2009 (85.5%). VAT was the weak link, falling by 1.15%, or over MDL 1.18 billion, because of sharply lower imports. Spending cuts fell mainly on the economic sphere (-9.2%, MDL -773.1 million) rather than the social sphere (-1.4%, MDL -463.5 million). Financing the deficit was hampered by the higher cost of government securities after the National Bank of Moldova tightened monetary policy.

Fiscal policy has not helped smooth economic cycles. According to Morcotîlo, the main risks concern the 2016 budget: the conditions of an agreement with the IMF, and how and at what cost guarantees issued by the National Bank of Moldova are converted into public debt, which will be crucial for the sustainability of public finances.

View the original article in Romanian