The public deficit down to 1.26 percent of GDP in July from 1.61 percent in June

The execution of the general consolidated budget for the first seven months of 2018 reported a deficit of RON 11.9 billion lei, or 1.26 percent of GDP, down from RON 14.97 billion, or 1.61 percent of GDP registered in the first semester, according to data published by the Ministry of Finance. In the first seven months of last year, the deficit was RON 5.1 billion, or 0.63 percent of GDP.

Consolidated general government revenues of RON 160.8 billion, representing 17 percent of GDP, were 13.9 percent higher, in nominal terms, compared to the same period of the previous year. There were increases over the previous year in the case of receipts from social contributions (+ 37.5 percent) and non-fiscal tax revenues (+ 20.7 percent).

“Since February receipts from social contributions were positively impacted by new legislative conditions for the transfer of contributions from the employer to the employee task regulated by GEO no. 79/2017 and non-tax revenues were positively impacted in July receipts from dividends “says MFP.

According to the cited source, in July 2018 there was an improvement in the collection of VAT revenues. They increased by 35.9 percent compared to the same month in 2017, reaching a value of RON 31.9 billion for the first seven months of the current year, an increase of 9.8 percent over the similar period the previous year. Revenues from excises amounted to RON 15.6 billion (1.7 percent of GDP) by 9.2 percent higher than in the same period of the previous year. Also, tax and property tax receipts increased by 6.2 percent over the same period in 2017.

There were decreases in revenues from wages and income tax by 22.7 percent due to the lowering, since January 1, 2018, the income tax from 16 percent to 10 percent. There is also a decrease of 32 percent over the same period of the previous year in the tax on the use of the goods, the authorization of the use of the goods or the carrying out of activities as a result of the application of GEO no. 52/2017 regarding the restitution of the amounts of the special tax for cars and motor vehicle tax, vehicle pollution tax for polluting emissions from vehicles and environmental stamp for vehicles.

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The amounts from the European Union for the payments made were RON 7.6 billion, 16.7 percent higher than those collected in 2017 during the same period.

As for the general consolidated budget expenditures, they amounted to RON 172.8 billion, 18 percent higher than in January-July 2017.

Staff wages costs were 25.1 percent higher compared to the first seven months of 2017, the increase being driven by wage increases granted under Framework Law no. 153/2017 on the remuneration of staff paid out of public funds.

Expenditure on goods and services increased by 8.5 percent. Significant increases were recorded both in local budgets and in the budget of the single national health insurance fund and in the budgets of public institutions financed from own revenues and budget subsidies.

Subsidies were higher by 6.3 percent over the same period of the previous year and interest rates increased by 20 percent, accounting for 0.9 percent of GDP, taking into account the aggregation of interest payment data for several securities benchmark country.

Social assistance expenses increased by 13.1 percent compared to the same period in 2017, mainly influenced by the 9 percent increase of the pension point from July 1, 2017 to RON 1,000 and 10 percent from July 1, 2018, reaching RON 1,100, and by increasing social benefits for retirees from RON 520 to RON 640 and the rise and changing the way down the monthly child allowance and incentive insertion.

Expenditures for investments, including capital expenditures, as well as those related to development programs financed from domestic and external sources, were RON 10.9 billion, 29.8 percent higher.