Worst crisis for finances

Figures show that this is the biggest plunge of all time, bringing all budget indicators outside the legal parameters. The total tax revenues for these first five months are 10.7 billion ALL less than the plan, and 7.6 billion ALL lower than one year ago.

To put it differently, this is the lowest revenue for the four past years, but while the incomes are dropping quickly, the government has increased spending for the elections.

The government spending have increased with 16 billion ALL compared to one year ago, while compared with the budget plan they are 6.3 billion ALL higher. The income drop and the increased spending have brought the deficit to 435 million USD, 2.2 times more than one year ago and 1.7 more than the plan.

The legal deficit limit was 48.9 billion ALL in the initial plan for 2013, but the government made a budget interference in April, bringing it to 60.7 billion ALL. According to this decision, the additional payment would be financed by the privatization money, with which they would pay the debts due to private businesses for their public works.

But the deficit might go even beyond, judging from this pace. The income decrease is expected to continue after the government decided to reduce several taxes before the elections, while the spending not only is not under control, but has increased beyond every limit.

Public finances might go out of control

The government is quickly entering a financial crisis. The decreased taxes and high spending before the election have brought the budget out of control, bringing the state finances to the lowest point since 1997.

Only five months were needed for the Parliament approved budget to go officially out of control. Even with this situation, the government is still continuing the fiscal expansion. Yesterday the Council of Ministers warned for a new wage increase and a record breaking compensation fund. While the revenues are in the fastest plunge in history, the government has only two ways after the elections: increasing debt in frightening levels or undertake painful cuts to the point of stopping investments until the finances come to their control. All of this has large costs for the economy. The first one increases the risks for a financial crisis, while the second damages the economic growth.

The government finances are feeling the crisis pressure for the fifth year, but never before had the fiscal indicators dropped to such low points, so far from the legal limit, before the half of the year. The dangers of this situation are too much, since the state budget itself is 30% of the GDP. This crisis would open unimaginable scenarios for the economy which is already in a seemingly endless crisis.

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