Romania’s budget deficit at end-2016, well below estimates

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Consolidated state budget deficit climbed to RON 18.3 billion at end-2016, from RON 5.5 billion after the first 11 months, representing 2.41 percent of gross domestic product (GDP), Ministry of Public Finances (MFP) data reveal.

The general consolidated budget includes both state budget (current expenses of the state) and social budget (public pensions and unemployment). For the whole year, the budget deficit was set at about RON 21 billion by the previous government, equivalent to 2.8 percent of GDP calculated on cash terms.

Consolidated budget revenues totaled RON 223.7 billion (29.5 percent of GDP) in 2016, by 4.3 percent lower compared to 2015, when the state had RON 233.5 billion (33.1 percent of GDP) at the budget

The decrease of budget revenues accelerated in December compared to the first 11 months, when the revenue decline was 1.9 percent.

Last year, the biggest decline was recorded for VAT receipts, which fell by 9.6 percent compared to 2015, despite the increase in trade sales at a rate of two digits.

Consolidated budget expenditures of RON 242.02 billion, or 31.9 percent of GDP last year fell by 0.9 percent compared to 2015, when the state spent RON 243.9 billion (34.6 percent of GDP).

Expenditure of public sector wages grew by 9.5 percent in 2016 compared to 2015, mainly due to wage increases granted in the second half of 2015 and the increase of the minimum wage to RON 1,250 lei, as of May 1st .

The investment spending was of only RON 29.5 billion, namely 3.9 percent of GDP, well below the projected level – the level of achievement was 76.5 percent.

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