Romanian Fiscal Council on budget revision: disappointing fiscal revenues offset only by below-target public investments

Meeting the 5.84%-of-GDP deficit target this year under the last budget revision operated by Romania’s Government, and even cutting it insignificantly to 5.74%, seems possible only because of sluggish public investment expenditures, the Fiscal Council (FC) argues in its opinion published on November 17.

The revenues to the general government budget indeed increased by RON 520 mln as announced by the Executive – but the central government budget (largely meaning the fiscal revenues) was revised downwards by some RON 2.4 bln in contrast to an upward adjustment of the nominal GDP, the FC points out.

Even so, the FC estimates that the revenues would fall 0.3% of GDP below the revised target (partly because of higher expenditures related to the energy subsidisation scheme that may furthermore increase) and expenditures would exceed the revised target by 0.3% of GDP (due to higher spending related to good and services as well as social security).

Despite this, the Government can meet the deficit-to-GDP target and even reduce it, thanks to lower-than-planned public investments (CapEx from its own budget and EU-funded projects), the Fiscal Council concludes.

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