Victoria Belous, Minister of Finance of RM
At the same time, the revenue item fell slightly short of the plan. The state budget revenues were planned at 66 billion 613.2 million lei, excluding transfers. As a result, they were realized at the level of 99%.
As for the state budget expenditures, the gap with the plan is bigger. They were implemented at the level of 97.5%. Initially, the expenditure part was planned in the amount of 82.2 billion lei. However, at the end of the year, this indicator amounted to only 80.1 billion lei. It turned out to be less even compared to the previous year 2023 – by 600 million lei.
The situation when the expenditure part does not grow compared to the previous year, but, on the contrary, shrinks, is very rare. Especially when inflation is taken into account. As a rule, at the stage of budget development, the reduction of expenditures is not planned. That is why experts paid attention to the phenomenon of budget expenditures reduction as early as last year. They attributed it to the fact that in 2024 the period of loan repayment came, the vacation on loans ended, and it worked negatively, putting pressure on the budget.
Initially, it was planned to receive almost 15 billion lei in loans, while the amount of debt repayment amounted to 10.8 billion lei. Less than a third of this amount was left for direct expenditures.
In other words, despite the fact that external resources were coming in, sending large sums of money to repay debts on loans led to a decrease in state budget expenditures, the experts said. And they concluded that the authorities would have to save on expenditures.
As a result, about 45.3% of the total amount of expenditures, as reported in the Ministry of Finance, is spent on programs and services financed from the state budget, while 54.7% – on transfers to local budgets, the budget of social insurance and compulsory health insurance. Most resources were allocated to social protection (26%), education (23.1%), general public services (14.3%), health care (11.4%), and economic services (10.8%)
The pain point of the previous 2023 budget was the record deficit. As experts noted, it did not fit within the EU’s allowable figure of no more than 3% of GDP. Otherwise, the country falls into a vicious circle, the so-called “Greek syndrome”, when the state borrows without taking into account this important indicator and finds itself in a hole. And only crisis management and cuts in expenditures rescue the country from it.
It is true that in the last four years the EU has forgotten about the 3% deficit threshold, which is prescribed in its fundamental documents. Post-pandemic practice in the union is such that governments do not observe this rule. In neighboring Romania it is even higher than in Moldova. Plus the war is superimposed. But if the budget deficit threshold is exceeded, expect trouble in the future.
Perhaps, that is why the Ministry of Finance tried to reduce its level in 2024. The deficit decreased by 18.8%, or by 3 billion lei and amounted to 13.1 billion lei against the plan of 15.790 billion lei. As a share of GDP, it fell to 4%, although it was initially planned at 4.6%.
The public debt amounted to 121.4 billion lei at the end of last year. Presenting the results of the 2024 budget execution, Finance Minister Victoria Belous said that the debt level is within the legal framework planned during the elaboration of the 2024 budget.
