Romania’s public deficit hits 9.8% of GDP in 2020

Romania's public deficit more than doubled in nominal terms and as a percentage of the GDP, to RON 102 billion (nearly EUR 21 bln) in 2020, as the revenues edged up marginally by 0.4% compared to 2019 while the expenditures rose by 14.8%.

The Government injected RON 46.31 bln (EUR 9.5 bln or 4.45% of GDP) into the economy through fiscal facilities, investments, and exceptional expenditures aimed to mitigate the effects of the COVID-19 epidemic, the Finance Ministry explained in the budget execution report.

The VAT revenues dropped by 7% compared to 2019 to RON 60.8 bln (EUR 12.5 bln), while income tax revenues were RON 24.3 bln (EUR 5 bln), down almost 5% compared to 2019, and the profit tax revenues decreased by nearly 10% in 2020, to RON 16 bln (EUR 3.28 bln).

Overall, the budget revenues edged up by 0.4% y/y to RON 322.5 bln (EUR 66.2 bln), which is 31.0% of GDP, up from 30.3% of GDP in 2019.

The transfers from the European Union's budget rose from 2.3% of GDP in 2019 to 3.1% of GD in 2020, which explains the slightly better budget revenues figure recorded last year.

On the expenditure side, public sector salaries increased by 7.5% in 2020 and amounted to RON 110 bln (EUR 22.6 bln). Also, social assistance expenditures (mainly pensions) increased by 20% and reached RON 138.5 bln (EUR 28.4 bln). Capital expenditures (state investments) increased by almost 10% and amounted to RON 33.2 bln (EUR 6.8 bln) in 2020.

Overall, the public expenditures rose by 14.8% y/y to RON 424.4 bln (EUR 87.1 bln), or 40.8% of GDP, up from 34.9% of GDP in 2019.

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