"There are no developments leading to an increase in the budget deficit" and "the sole purpose of the budget revision is re-allocating the resources among ministers, if necessary," Romanian prime minister Florin Cîţu said on August 2, quoted by News.ro.

He was commenting about the budget revision expected around the mid of this month. The statement is striking since, in fact, the Government has a big opportunity to take a headstart and cut the budget deficit a bit more than planned in January, under bleaker expectations.

PM Cîţu himself announced recently "maybe double-digit rate" growth this year, which is more than double the 4.3% assumption used for the initial budget planning.

"The resources allocated in the budget, at the beginning of the year, are sufficient, given the pace of monthly expenditures in the first half of the year," Cîţu added.

The budgets of some ministries will benefit from additional resources, but within the limit of the assumed budget deficit, of 7.16% (or less), the head of the Government concluded.

This means that either the Government under-budgeted its planned expenditures, or PM Cîţu plans to use the windfall revenues generated by the quicker than expected economic recovery for various projects still not announced.

In case such projects are related to investments, this might be positive to the extent that the public administration can absorb the supplementary funds and implement investment projects.

But the context of internal elections in the National Liberal Party (PNL), where PM Cîţu seeks to replace incumbent leader Ludovic Orban, constitutes a risk of potentially arbitrary distribution of supplementary budget revenues on a political rather than economic basis.

PM Cîţu announced that "a first draft" of the budget revision was already inked, but it still waits for the individual ministers' reports on their H1 budget execution (which was supposed to serve as the basis for the revision). It is another puzzling statement indicating a potential arbitrary distribution of funds. 

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iulian@romania-insider.com