EC: cost of COVID-19 subsidies to Romania's budget was 1.53% of GDP in 2020

The cost of the measures taken by the Romanian government to help the economy and households during the coronavirus crisis was 1.63% of GDP, according to the extended version of the European Commission's Recommendations for Romania published under the Excessive Deficit Procedures on June 2, Hotnews.ro reported.

Out of this, nearly 0.1% was covered by the funds disbursed from the European Union's budget - resulting in a 1.53%-of-GDP of the government's COVID-19 support package.

Out of this, nearly half (0.74% of GDP) represented employment support measures (technical unemployment, kurzarbeit and other measures), and another significant part (0.4% of GDP) was formed by the purchase of medical material for COVID-19 treatment.

The 1.5%-of-GDP figure does not include other measures taken by the government, more or less related to COVID-19, such as taxes deferred (anyways neutral, on an accrual - versus cash -basis), accelerated VAT refund or even more public investments - all of these announced by the government under the COVID-19 package umbrella.

The EC's extended Report also provides an estimate of the impact of the COVID-19 package on Romania's public budget in 2021 and 2022.

Along with the 2020 budget execution data, the government claims that it "injected in the economy through fiscal allowances, investments and extraordinary expenditures, 4.45% of GDP - nearly half of the 9.8%-of-GDP public deficit. Almost 2% of GDP is formed, however, by deferred taxes - the revenues that are being cashed by the government in 2021 and already pushed up the revenues.

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