Moldovan cabinet hears report on execution of state budget for 2018

Chisinau, 29 May /MOLDPRES/ – The Government has approved today the draft resolution of Parliament on the State Budget Execution Report for 2018. According to the project, the state budget (BS) was executed at revenues of MDL 36.4 billion and expenditures amounting to MDL 38.7 billion, to a deficit of over MDL 2.27 billion.

"The budgetary – fiscal policy in 2018 was prudent, aiming at strengthening budgetary – fiscal position and managing effectively of public finances," said the report. On 01 October 2018, it was initiated the tax reform. It referred to several changes in VAT and excise duties, increase in personal exemption in the size of the minimum subsistence level (MDL 24,000), introduction of the single rate of income tax for individuals in the amount of 12 per cent. Also, reducing the social security contribution paid by the private sector employer from 23 per cent to 18 per cent.

For the first time, the budgetary – fiscal rule that limits the National Public Budget deficit (without grants) to 2.5 per cent of the Gross Domestic Product was applied in 2018. The national public budget in 2018 registered a deficit of MDL 1 billion 613.0 million, compared to the planned amount of MDL 6 billion 461.3 million. As a share of GDP, it accounted for 0.85 per cent, by 2.52 percentage points less than the forecasted level. The lower deficit is explained by under – execution of expenditures by local budgets as well as of projects financed from external sources, as a result of "uncertainty of financing these projects, late execution of works, procurement and termination of contracts on some projects".

The national revenues were 0.2 per cent lower than the annual provisions, and the share of expenditures was 92.3 per cent. The revenues increased by 8.7 per cent in 2018 compared to 2017, while spending grew by 9.3 per cent.

According to report, the receipts to the state budget were made in the amount of MDL 36 billion 432.7 million, 1.5 per cent below the stipulated provisions, and the expenditures were made in the amount of MDL 38 billion 708.3 million, 7.9 per cent below the level of stipulated provisions.

In the structure of the state budget revenues for 2018, the preponderant part – 93.5 per cent represents the receipts from taxes and duties. The Ministry of Finance (MF) reports increases in expenditure practically in all areas, the most significant being in the economy (+21.8 per cent); national defence (+13.3 per cent); social protection (+11.8 per cent); public order and national security (+8.4 per cent); education (+8.1 per cent); culture, sports, youth, cults and rest (+6,3 per cent); healthcare (+5.4 per cent).

The share of Government debt in GDP as of 31 December 2018 was 27.4 per cent, 1.5 percentage points lower than at the end of 2017.

The Cabinet has also approved the draft resolution of Parliament on the Report on execution of healthcare insurance funds and Report on execution of state social insurance budget in 2018.

The three projects, approved by the Government, will be submitted for Parliamentary scrutiny.