Romania’s public deficit stays at 4.0% of GDP at end-October

Romania’s general government deficit reached nearly RON 48 bln (EUR 9.75 bln) in January-October, 35% less compared to the same period of 2020. The deficit to GDP ratio dropped to just over 4.0%, from 7.0% last year.

However, for the rest of two months, in November and December, the Executive wants to boost spending and add another 3pp to the debt-to-GDP ratio (to 7.13%) - more than it did in the same period of 2020. This is likely to provide a substantial fiscal stimulus to the economy and possibly bring the GDP growth for the full year above 7% - the official target currently questioned by independent analysts after the disappointing Q3 GDP flash estimate was released.

Over the first ten months of the year, the substantial drop in the deficit-to-GDP ratio (3pp) was partly explained by stronger revenues (0.9pp) and, to a larger extent, by the smaller expenditures (2pp).

Revenues increased by 17.1% YoY to RON 308.6 bln (25.9% of GDP, up from 25.0% of GDP last year). Expenditures rose by only 5.6% YoY to RON 356.6 bln (30% of GDP, down from 32% last year).

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