Last Monday 15 of this month, the Executive Power sent to the National Congress a project that modifies laws 237-20 and 166-21 of General State Budget 2021 to introduce changes in income projections and in spending programming, leaving the financing needs for this year unchanged.
The decision to present a new budgetary modification is based on the dynamics of the fiscal accounts during the first 10 months of 2021, in a macroeconomic perspective that points to a real expansion of the economy around 10.7% for this year and in the commitment of the current administration to make the management of public resources transparent.
The piece submitted for study and approval raises an increase in tax revenue of RD $ 63,641.8 million with respect to what was projected in the Budget Reformulated in July. It is now estimated that tax revenues at the end of 2021 will amount to RD $ 830,007.2 million, equivalent to 15.6% of the projected Gross Domestic Product (GDP), taking into account the dynamics that have shown so far, the promising economic prospects for the rest of the year. year and the continuation of efforts to combat tax avoidance, evasion and fraud.
Regarding spending, a net increase of RD $ 13,263 million is proposed, with which the expenditures will amount to RD $ 989,853.2 million or 18.6% of the estimated GDP for the year. The increase in spending responds to the growing demand for resources associated with supporting the revitalization and strengthening of the productive fabric, the social programs necessary to support the most vulnerable population, the fight against the pandemic and counteract the rise in consumer products massive, according to the note.
They mitigate spending
The new budget project highlights that the total increase in spending for the remainder of the year has been mitigated by a strong prioritization process and increased efficiency in the quality of public spending, an effort that has managed to produce savings of RD $ 22,075 million in the contracting of advertising, printing, travel, rentals, insurance, bonuses, allowances and representation expenses and in the purchase of materials and supplies.
Likewise, it points out that, in addition to the increase in spending, there was a recomposition between institutions worth RD $ 52,058.6 million, allowing the channeling of resources to priority areas.
When considering future revenue trends and spending expansion, the project contemplates a reduction in the fiscal deficit of RD $ 50,378.8 million With respect to what was previously estimated, placing the gap between income and expenses at RD $ 159,846 million at the end of the year, returning to 3% of GDP expected at the beginning of 2021.
The submitted piece also raises an increase in financial applications for RD $ 50,378.8 million, in line with the evolution of the fiscal result.
This increase responds to the objective of creating the space for a potential liability management operation, subject to the credit conditions of the markets. A transaction of this type would make it possible to organize the debt maturity structure, improve the profile and reduce the cost of financing, consistent with the debt strategy developed in the last year.
For the second time, the budget modifications presented do not involve an increase in the level of public indebtedness in relation to the current budget, which marks a milestone in the management of public finances, the statement said.
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