Home / BUSINESS / FINANCIAL / Update: Budget deficit up to 0.88pc of the GDP in five months, five times higher in nominal terms. Fiscal Council pulls the alarm signal
Budget deficit of RON 5.1 bn, or 0.63 pc of GDP, after 7 months

Update: Budget deficit up to 0.88pc of the GDP in five months, five times higher in nominal terms. Fiscal Council pulls the alarm signal

The Finance Ministry has released the execution of the consolidated state budget, with the figures revealing a higher deficit, up to 0.88% of GDP in May, against 0.65% of GDP in April.

In the first five months of 2017 Romania had a deficit of 0.25% of GDP. By nominal value, the deficit was of RON 2.17 billion in May 2017, increasing in May 2018 to RON 8.18 billion, up 3.7 times.

The consolidated state budget revenues amounted to RON 110.9 billion, i.e. 11.9% of GDP, by 12.7% higher in nominal terms against the same period last year.

  • Higher revenues from insurance (+35.5%) and non-fiscal revenues (+11.4%);
  • In May 2018 the collection of VAT revenues improved, they increased by 16.8% against May 2017, up to RON 21.98 billion in the first five months of the year;
  • Revenues from excise duties amounted to RON 11.06 billion (1.2% of GDP), by 13.7% higher than in the same period last year;
  • Revenues from taxes on property increased by 6%;
  • Revenues from tax on wages and earnings dropped by 19.7%, due to the decrease of revenue tax from 16% to 10% in February 2018;
  • The amounts from the EU for payments made amounted to RON 6.03 billion, by 31% higher than the amount collected in 2017 during the same period.

The expenditures from the consolidated state budget amounted to RON 119 billion, by 18.4% higher than in the same period last year.

According to the Finance Ministry, “the expenditures on staff are by 22.3% higher than in the same period last year, following the wage increases according to Law 153/2017. The expenditures on goods and services have increased by 10.2% against the same period last year. Subsidies are by 1.9% higher than last year.

  • The interest rates are by 34.9% higher than last year, i.e. 0.6% of the GDP, with peak payments in April;
  • Expenses on social assistance increased against last year by 10.5%, due to the increase by 9% of the pension point on July 1, 2017, up to RON 1,000 and due to the change in setting the monthly indemnity for child-raising and of the insertion incentive;
  • Expenditures for investments, including capital expenses, as well as those for developing programmes funded from domestic and external sources, amounted to RON 7.4 billion, by 1.8 times higher than in the same period last year.

Fiscal Council warns Gov’t over deficit

The Fiscal Council President, Ionut Dumitru, warns that the wage expenses have exceeded 22% growth, up from 16% the estimated level and that the public investments have almost ceased.

Dumitru envisages a shock in regard to the social assistance in the coming period, as the consolidated state budget deficit was of RON 8.14 billion in the first five months, realitatea.net reports.

“There is already a 10.5% deficit in five months for social assistance, against an increase of 6.5% considered for the entire year, a shock is expected in the coming period and a strong expense increase. As of July 1 the pensions will increase, the pension point will grow by 10%, the minimum pension will increase. This means RON 5 billion more to the staff and social assistance expenditures in order to cover the needs by year end,” Ionut Dumitru said.

 

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