Last update: Saturday, 09 December 2023
Court of Accounts of the Republic of Moldova


Home | Press | News

Execution of the state budget and the state debt, examined by the profile Parliamentary Committee

  • 30.03.2022
  • 824

The Court of Accounts of the Republic of Moldova (CoARM) presented on March 30, within the Public Finance Control Committee (PFCC) of the Parliament of the Republic of Moldova, the Financial Audit Report on the Government’s Report on the execution of the state budget for 2020 and the Compliance Audit Report on state debt management, state guarantees and state re-credit in 2020.

A presentation of the results of the mentioned reports was made by Petru Rotaru, Member of the CoARM, as well as the auditors responsible for the audit.

Thus, the CoARM’s auditors informed the members of the Parliamentary Committee that, according to the specified budget of the state budget for 2020, 103.3% of revenues were achieved, according to the Government’s Report, with an excess of about 1.2 billion lei, and 93.2% of non-financial expenses and assets were executed, being 3.6 billion lei lower.

Given that the state budget for 2020 was specified with a deficit of about 15.6 billion lei, the budget year ended with a deficit of 11.1 billion lei, which is 69.6%. Compared to 2019, the result of the budget year increased by 358.5%. At the same time, compared to the indicators initially approved throughout the annual budget law, the level of execution in the revenue part reached the proportion of 87.2%, and in the expenditure part of 96.3%, as a result, the realized deficit constituting 150.2%.

As a result of the cash execution of the state budget, the balances of funds, as of December 31, 2020, amounted to 4.1 billion lei, of which the balances to the basic component - 2.6 billion lei, and the balances of projects financed from external sources - 1.5 billion lei, increasing by 41.7%, compared to December 31, 2019.

In this context, similar to previous years, the audit shows the weak capacity of external authorities to absorb external assistance, including caused by the COVID-19 pandemic that stopped some project activities, as well as the failure to fully meet the conditions for the disbursement of tranches related to budget support programs.

The situation of major arrears from the state budget remains problematic, the audit reveals that in 2020 only 2 revenue managers (State Tax Service and Customs Service) submitted to the Ministry of Finance reports on arrears to the state budget.

According to the data reported by the Ministry of Finance, the arrears on the payment of taxpayers' obligations to the state budget amounted to 1.4 billion lei, which, compared to the previous year, increased by 126.1 million lei (10.0%). In the structure of arrears, the preponderant part belongs to the taxes and duties administered by the bodies of the State Tax Service, which constitute 71.2% (986.2 million lei), and to those administered by the Customs Service - 28.8%, which constitute 399, 2 million lei.

Execution of expenditures, in terms of economic destinations, amounted to personnel expenses - 7.0 billion lei, goods and services - 1.7 billion lei, interest - 1.7 billion lei, subsidies - 5.1 billion lei, other expenses - 2.9 billion lei, etc.

One of the problematic aspects is related to the specifics of the concept of planning and financing the allocations through the “General Actions” component. Thus, allocations of 30.3 billion lei were approved for “General Actions”, which constitutes about 56.9% of the total expenses and non-financial assets fully approved (53.2 billion lei). This context, according to the audit, cannot ensure the transparency of the management of public funds.

As a result, the Court of Accounts submitted 10 recommendations to the Ministry of Finance regarding the development of the regulatory framework related to revenue accounting, improving the management of public finances, including by ensuring the quality of accounting and reporting the state budget according to the regulatory framework, reporting on the investment process to raise the level of execution of capital investment allocations from external financial means and from internal sources, etc.

With regard to the Compliance Audit Report on State Debt Management, State Guarantees and State Re-credit in 2020, the Court of Accounts highlighted several findings.

The audit revealed that the Ministry of Finance, during 2020, ensured the management of the state debt, state guarantees and state re-crediting according to the related legal framework, respecting the limits approved by both the Annual Budget Law and those established in the Program "Medium-term government debt management (2020-2022)".

Thus, on December 31, 2020, the balance of the state debt amounted to 67.8 billion lei, which being increased by 15.3 billion lei compared to the previous year, was within the limits established by the Annual Budget Law. As a share in GDP, in the reference year the state debt constituted 32.9%, registering an increase compared to 2019, by 7.9 percentage points.

The balance of the domestic state debt amounted to 29.2 billion lei (at nominal value), which compared to the beginning of the year was increasing by 5.7 billion lei.

The balance of the external state debt amounted to 2241.4 million USD, increasing by 537.3 million USD compared to 2019. Disbursements of foreign loans during 2020 amounted to 551.6 million USD, which is 402.5 million USD more than the 2019 disbursements.

In 2020, 15.7 billion lei were paid for servicing the state debt, including 14 billion lei for the repayment of the principal amount and the redemption of State Securities (SS) matured and 1.7 billion for the payment of interest and commissions.

At the same time, the audit identified:

  • Impossibility of reimbursement by some economic agents of the re-credited means, which conditions annual cancellations of these debts and incurring unforeseen expenses from the state budget
  • Projects re-accredited through the Ministry of Finance have a low rate of recovery of financial resources. Thus, during 2020, through the State Tax Service, 13 million lei were recovered in the state budget, which constitutes only 9% of the debt balance with expired payment term.
  • Implementation of externally funded projects continues to be low
  • The disbursement of the loans is delayed in some cases, and the payment of the commissions provided in the loan agreements is made from the contracted and/or non-disbursed amount of the loan, as a result of which additional expenses are generated to the state budget.

In 2020, 10 new loans were contracted, and financing contracts totaling 685.01 million USD were signed, of which 7 agreements for projects financed from external sources and 3 agreements for financing the state budget deficit. Of the total value of loans contracted in 2020, on December 31, 2020, 47.33% were disbursed.

In the context of the above, the Court of Accounts notes that the management of the state debt, state guarantees and state re-credit management needs continuous improvement, in this regard being made recommendations aimed at improving the audited field.

reset WAY cursor WAY contrast WAY Marire Font WAY Alb negru WAY Linkuri WAY