Romania’s general consolidated budget, which includes fiscal and social budgets of the government, registered after the first five months of this year a deficit of RON 8.14 billion, or 0.88 percent of GDP, compared with a public deficit of RON 2.17 billion (0.27 percent of GDP) in the same period of 2017, Government sources told Business Review. In the first five months of 2016, the budget had a surplus.
According to latest data published for the first five months, budget revenues rose 12,7 percent against the first five months of 2017, but the expenses surged by 18,4percent.
The general budget for the first five months of 2018 closed with a deficit of RON 8.14 billion, or 0.88 percent of GDP, compared with a deficit of RON 2.17 billion, in the same period of 2017, Finance Ministry data show.
After the first three months of this year, the budget registered a deficit of RON 6.5 billion , or 0.6 percent of GDP.
At the same time, budgetary wage expenses increased by 22.3 percent during the first five months, and capital expenses soared by 102 percent. The expenses with goods and services increased by 10.2 percent compared with the same period of 2017.
Soaring interest expense
But experts are particularly concerned about the rapid increase of government’s interest expenses. Official data show that interest expense rose by 34.4 percent during the first four months of this year, to RON 5.55 billion, from RON 4.11 billion in January-May 2017.
Higher deficits can make it more difficult for the Romanian government to raise funds in order to finance the public debt.
Romania is already the EU member state that pays the highest interest rates for its debt (3.96 percent per year in 2017) and recent Eurostat data showed Romania posted the highest annual inflation rate among the European Union member states in April.
Income tax and salary tax revenues decreased by 19.7 percent. In total, fiscla revenues increased only by 0.5 percent.