Fiscal Council head: Romania’s public finances risks negative budget adjustment this year

The Government will have to take measures for the budget adjustment if the figures will still be bad after 3 months as at the end of January, with drop in revenues and a weak collection eate. The budget adjustment can be done in July the earliest, with the possibility of reducing expenses or increase the revenue, which are the lowest from Europe, said the president of the Fiscal Council, Ionut Dumitru.

The revenues of the general consolidated budget were worth RON 19.2 billion after the first month of 2017, representing 2.4 percent of GDP, by 5.7 percent lower in nominal terms compared with the same period of 2016, according to the data of the Finance Ministry.

At the same time the budget activity closed with a surplus of RON 3 billion (0.37 percent of the GDP), a drop by RON 4.7 billion (0.62 percent of the GDP) in January 2016.

The VAT collection rate registered a drop by 24.8 percent compared with January 2016.

On the other hand the expenses of the consolidated budget, amounting to RON 16.2 billion, went up in nominal terms by 3.5 percent compared with the same period of 2016.

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„It’s too early to get to a clear conclusion, we should see at least 2-3 months, but the data are more than worrying because we forecasted a revenue increase by 14-15 percent and in January this figure stood at -5 percent. I am not a supporter of making a tragedy of it, but we need to understand what’s going on with the revenue collection,” said Dumitru at Digi24.

The Fiscal Council has warned since the budget draft publishing that the Finance Ministry overestimated the revenues planned for this year, while the expenses were underestimated, as they didn’t cover the already adopted measures, without including the Government promises for 2017.

„The risk of registering an increasing deficit this year is higher. If it’s true, it’s imminent to have a negative budget adjustment, for which to make corrections. Anyways even the deficit of 3 percent as it was planned it’s too much for Romania at the moment, because Romania has economic growth and we should use these periods to accumulate some reserves to fight against the next recession, which is unavoidable,” said Dumitru.