The government has embarked upon acomprehensive and difficult medium term program forreforming the public sector aimed at rebalancing therelation between revenue and spending and enhancing theefficiency and efficacy of service delivery. The Romanianeconomy has been hit hard by the global economic downturn.Latest estimates suggest that real Gross Domestic Product(GDP) may have contracted by around 7 percent in 2009,before modestly recovering in 2010. The severe decline inoutput has had a significant adverse effect on consolidatedbudget revenues, which fell substantially below the initialtarget in 2009. To prevent a further deterioration of thealready large fiscal deficit, the shortfall in revenue hasled to adjustments in spending. Consolidation of expenditureneeds however continue in order to put public finances on asustainable trajectory over the medium term. The report isstructured in two volumes. The first volume synthesizes themenu of options suggested to reduce the short term gapbetween budget expenditure and revenues. It also highlightsthe key challenges and recommendations for improvingefficiency and efficacy of spending in the sectorsinvestigated. Volume two consists of the backgroundanalyses, with individual chapters dedicated to the fiscalframework; public pay; pensions; education; health; andagriculture. The report makes the case that, in the currentcrisis environment and consistent with experience worldwide,the gap between expenditure and revenue should be doneprimarily by reducing the level of current spending.
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