Cabinet approves 2023 state budget with deficit representing 6% of GDP

The deficit of the national public budget for 2023 was assessed at about 18.5 billion lei or 6% of the GDP. The state budget accounts for almost 99% of the deficit, while the local budgets for the rest. This is provided in the draft state budget law for next year that was approved by the Cabinet. The Ministry of Finance estimates 2023 will be difficult owing to the multiple crises experienced by the country, IPN reports.

The deficit of the national public budget next year will be financed with internal and external sources, especially foreign assistance intended for projects and in budget support, state securities issues, shareholdings.

Minister of Finance Dumitru Budianschi said the macroeconomic forecast for 2023 provides that the GDP in real terms will rise by 2% on 2022, while in nominal terms will come to 308.8 billion lei.

“The year is expected to be difficult from economic viewpoint. The average inflation was projected at 15.7%, with a 1.4% increase in exports and a 3.2% rise in imports. This shows the economic activities in the Republic of Moldova will slow down. The average official salary will grow by 13.8% to about 11,700 lei in 2023. Why will 2023 be so difficult? Due to the costs that adjust to inflation much fatter than the revenues. The revenues lag behind and this discrepancy appears. We cannot suddenly reduce costs as this would mean diminishing funds for vital programs of the public sector. Therefore, there is only one solution – to borrow as much as we can and do those reforms to optimize costs,” stated the minister.

The revenues of the national public budget next year were planned at 100.7 billion lei, up 10.6% on 2022. The costs will total 119.2 billion lei, up 12.9%. The state budget revenues were projected at 64.9 billion lei (+9.3%), which is 21% of the GDP. The amounts that will be collected as taxes were estimated at 56.9 billion lei and will represent 87.8% of the revenues, up 9.6% on 2022. The value added tax will constitute 59.9% of the amounts collected as taxes, representing 52.6% of the state budget revenues.

According to the minister, owing to the efforts made by the authorities, 5.5 billion lei was attracted in grants and 4.3 billion lei of these will be used as budget support. “This is a considerable amount without which things in 2023 would have been much more difficult,” stated Dumitru Budianschi.

He noted that the main policy measures refer to social protection and assistance, including the Energy Vulnerability Reduction Fund to the value of 5 billion lei.

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