he
country suffered a disastrous flood. In the planned budgets for 1971 and
1972 revenues and expenditures were perfectly balanced.

Budgetary revenues increased steadily from about 58 billion lei in 1960
to 147 billion lei in 1969, and expenditures rose correspondingly from
about 55 billion lei to 143 billion lei. The budgets for 1971 and 1972
were planned to balance at a little more than 138 billion lei and 152
billion lei, respectively. Reasons for the decline in the size of the
1971 budget, the only decline reported in at least a decade, are not
known.

A turnover tax levied on consumer goods, farm products, and farm
supplies and a profit on the income of economic enterprises and
organizations constitute the main sources of budgetary revenue. The
relative importance of the two levies changed after 1966; the yield from
the profit tax approached that from the turnover tax in 1967 and grew
relatively larger in 1968 and 1969. Together, these two levies accounted
for from 50 to 56 percent of the annual revenues. Direct taxes on the
population yielded close to 6 percent from 1960 to 1969, except that in
the first and last years of that period their proportion approached 7
percent. The magnitude of direct taxes does not reflect the real tax
burden borne by the population, because the population ultimately pays
both the turnover and the profit tax through higher prices of consumer
goods.

Financing the national economy absorbed an average of 64.6 percent of
annual expenditure in the first half of the 1960s and 68.3 percent in
the second half of the decade. At the same time the proportion of
outlays for social and cultural purposes declined from an average of
24.9 percent to 23.2 percent, although the absolute amount of these
outlays more than doubled. Expenditures for defense declined from 6.1
percent of total outlays in 1960 to 4.4 percent in 1969.

BANKING

The banking system operative in early 1972 was the end product of
several institutional reorganizations, the last of which was completed
in May 1971. The main purpose of the reorganizations was to make bank
credit a more effective tool for promoting economic development and for
controlling the operations of economic enterprises and organizations.
Control through credit extension has been officially considered an
important means for inducing enterprises and trusts to attain the
targets of the economic plans. Little information is available on the
banks' operati