Romania’s public deficit up 80 percent y/y in May, reaching 1.4 pct of GDP

Romania’s general consolidated budget, which includes fiscal and social budgets of the government, registered a deficit of RON 14.7 billion in the first five months of this year, or 1.4 percent of estimated GDP, which was 80.6 percent higher than the deficit recorded at the same time last year, on the back of soaring public wage spending (+24.6 percent), according to data published by the Finance Ministry.

In the first 5 months of 2018, the public deficit reached RON 8.14 billion (0.88 percent of GDP). In the previous year, it reached RON 2.2 billion (0.27 percent of GDP).

In January-May 2019, budget revenues reached RON 123.8 billion or 12 percent of GDP, compared to 11.7 percent of GDP recorded at the same time last year.

The Finance Ministry says that revenue growth has been recorded this year for social contributions (18.5 percent), VAT (12.8 percent), non-fiscal revenues (11.5 percent), excises (5.6 percent). Revenues from property taxes also increased by 7.8 percent.

Data show that lower revenues came from wage taxes (-7.9 percent) due to the decrease in the tax rate from 16 to 10 percent.

Budget spending reached RON 138.5 billion, 16.3 percent higher than the same period of last year, mainl driven by the increase in personnel spending (+24.6 percent) due to the increase of wages in the public sector.

Spending on goods and services increased by 14.8 percent compared to the first five months of 2018, while interest spending grew by 13.7.

Social assistance spending has recorded a 15 percent increase compared to last year, mainly due to the higher pensions since July 2018.

Spending on investments, which include capital spending as well as spending related to development programmes funded by internal and external sources, reached RON 9.6 billion – RON 2.2 billion higher than during the same period of 2018.