Romania's public budget performs above expectations in April

Romania’s public deficit widened by nearly 50% in April compared to the same month last year, to RON 8.76 billion (EUR 1.8 bln), Romania’s Finance Ministry reported.

Such quick advance would prompt concerns in normal conditions, but it is not surprising given the current circumstances.

The Finance Ministry estimates the coronavirus-related fiscal stimuli provided since mid-March at 1.5% of GDP.

The budget gap accounted for 0.81% of the year’s projected GDP in April alone (compared to 0.56% of GDP in April 2019). In the first four months of the year, the budget deficit reached nearly 2.5% of GDP, up from 1.08% in Jan-Apr 2019.

The public gap widened by 135% year-on-year in Jan-Mar (Q1) as the Liberal Government paid all its obligations to companies to stimulate the economy and encourage voluntary tax compliance. This explains most of the 1.4%-of-GDP increase of the budget deficit in Jan-Apr, compared to the same period last year.

In April, the budget revenues increased surprisingly by 4.7% year-on-year to RON 26.0 bln (EUR 5.4 bln) as the profit tax collected rose by 28% to RON 3.6 bln (EUR 742 mln), and the excise tax revenues advanced by 24%. Meanwhile, total expenditures went up by 12.9% to RON 34.7 bln (EUR 7.2 bln).

Social security expenditures, representing nearly a third of total public spending, rose by almost 18%. The expenses for goods and services rose by 26%, most of the increase most likely related to sanitary equipment. The capital expenditures, also likely to have increased for last-minute acquisitions in hospitals, more than doubled compared to April 2019.

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