Romania’s 8-month budget deficit reaches 0.2 percent of GDP

The Ministry of Finance said the budget execution was closed with a deficit of 0.24 percent of GDP by the end of August, against 1.3 percent of GDP in the same period of last year, on the back of a higher nominal collection of taxes and lower public investments. The country targets a budget deficit of 2.2 percent of GDP this year.

The revenue to the consolidated budget rose by 4.3 percent in nominal terms to RON 136.8 billion, accounting for 20.7 percent of GDP on seven months. Collection went up for social insurance contributions (RON 2 billion), property taxes (RON 1 billion), excises (RON 1.5 billion), profit tax (RON 944 million and VAT (RON 345 million).

Revenue from the tax for the usage of goods fell 48.9 percent, due to the collection in the previous year of license taxes for the rights to use radio frequencies worth RON 2 billion.

According to the Ministry of Finance, the tax take of local administration rose by 5 percent on property tax, while on the tax for usage of goods and non-fiscal revenues it rose by 2.8 percent and 1.5 percent, respectively.

The amounts disbursed by the European Union on the accounts of already made payments were 2.9 percent higher compared to last year, accounting for 0.7 percent of GDP.

Consolidated budget expenditure, meanwhile, fell by 0.5 percent in nominal and real terms to RON 138.3 billion. Personnel expenditure rose by 3.1 percent due to the increase of the minimum wage from RON 800 to RON 900 this July and the payment of additional wages won in court by public sector workers.

Expenditure of goods and services added 0.3 percent because of the payment of arrears in the pharmaceuticals sector, following the enforcement of a late-payments directive into national legislation.

Interest payments lost 2.3 percent due to lower yields on benchmark bond issues.

Expenditure for investments, including capital expenditure and those related for development programs financed through internal and external sources, stood at RON 14.1 billion, accounting for 2.1 percent of GDP. Investments amounted to RON 17.3 billion in the same period of last year, but this includes the payment of arrears worth 2.8 billion.