Romania’s budget deficit reached almost EUR 700 million, or 0.41% of the GDP after the first eight months of this year. By comparison, the budget recorded a surplus EUR 1.45 billion, or 0.92% of the GDP between January and August last year.

In the first seven months of this year, the budget deficit was EUR 390 million, or 0.23% of the GDP.

The consolidated budget revenues went down by 1.9% in the first eight months of 2016 compared to the same period of last year, to EUR 32.8 billion. The budget revenues represented 19.4% of the GDP, compared to 21% in the first nine months of 2015.

The drop was mainly due to lower VAT revenues and lower EU fund inflows, which cancelled the increase recorded by other revenue categories.

The VAT revenues were 9.4% lower compared to January-August 2015, at EUR 7.73 billion. This was due to lower VAT rates compared to last year. However, the states revenues from the corporate profit tax, individual income tax, property tax, excises, and social contributions all went up.

Companies paid EUR 2.44 billion worth of profit taxes, up 10.7% compared to the first eight months of last year. Meanwhile, individuals paid almost EUR 4 billion worth of income taxes, 3% more than last year. The revenues from social contributions also went up by 6.6%, to EUR 8.86 billion, as the average salary in Romania went up and the number of employees also increased.

Romania only received EUR 540 million worth of payments from the European Union in the first eight months of this year, some EUR 900 million less than in the same period of 2015, which is mainly where the revenue drop comes from.

On the expense side, Romania recorded a 4.7% increase in the first eight months of this year, to EUR 33.5 billion. The current expenses went up by 2.9%, to EUR 31.7 billion, mainly driven up by higher personnel costs in the public sector, and higher welfare expenses. The Government also increased its capital expenditure by a third, to EUR 1.75 billion.

Finance minister: Romania needs to return to a budget deficit of up to 1%

editor@romania-insider.com