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A historically low level of capital investment is noted in the Report of the European Commission presented these days. He notes that Government spending, which he criticizes, is for social transfers, not for economic development.
The Progress Report by the European Commission notes that the structure of government spending is more prone to current expenditures and revenue support, at the expense of investments that, if realized, should increase economic growth.
It follows that government spending is not focused on economic development, but is spent mostly on social transfers.
“After the marked increases between 2009 and 2012, the share of capital expenditures in total central government expenditures decreased from 12% (2012) to 6% (in 2018) and increased marginally to 8.2% in 2019, which is only 78% of the budget rebalance,” the report said.
From the available information from the Ministry of Finance, as of 31.08.2020, the total realization of capital investments is 39.52%, which is a worryingly low level or only 125,926,324 million euros out of the projected 318,606,037 euros.
Institutions need to find a way to invest capital in durable goods by the end of the year to create economic growth worth almost 200m euros. The slow pace of change, the inadequacy of institutions, and the inefficiency of non-implementation of capital projects make the economy an additional recession.
Therefore, it is not surprising that in the Report as part of the reasons for the insufficient realization of capital investments are listed the revision of projects and problems with project implementation by the Government.
